21 July 2012
Summary of Analyst Report: Bursa Malaysia target price at RM 6, Fully Valued - HwangDBS Vickers
Net profit of RM37.9mil (a drop of 7% quarter-on-quarter) for the second quarter of financial year 2012 (FY12) took first-half earnings to RM78.7mil or 55% of our FY12 estimate.
The second-quarter profit was weaker quarter-on-quarter largely due to lower revenues; operating expenses were relatively stable despite lower marketing and development expenses.
Revenue from equities fell 16% quarter-on-quarter due to softer trading activity in the securities market.
Average daily turnover volume and value in the second quarter fell to 1.14 billion (a drop of 41%) and RM1.48bil (a drop of 21%), respectively, while velocity fell to 27% from 34% a quarter ago.
Derivatives revenue improved by 33%, led by trading volume which rose 30%. Stable revenue, which largely tracks listing activity, was flat in the quarter.
It has declared 13.5 sen interim dividend per share (single-tier).
We are keeping our FY12 assumptions: average daily turnover volume of 1.11 billion and daily turnover value of RM1.47bil.
The strong trading momentum in the first quarter has fizzled out quickly in the second quarter and current market sentiment remains volatile.
Our key concern remains the sustainability of trading volumes and values. Year-to-date Jun average daily turnover volume and value were 1.53 billion and RM1.67bil, respectively.
Our RM6 target price is based on the dividend discount model, which assumes 90% dividend payout, 7% long-term growth and 11% cost of equity.