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Analysts say Bursa special dividend is a positive surprise

ETALING JAYA: While Bursa Malaysia Bhd’s first half FY18’s (1H18) net profit came largely in line within expectations, its special dividend is a positive surprise, according to analysts.

The stock exchange operator announced that its net profit rose by a decent 5% year-on-year (y-o-y) in 1H18 despite a weak 2.1% y-o-y increase in revenue.

In the second quarter (2Q18), net profit was lower by 9% quarter-on-quarter to RM58.2mil.

It also announced a special dividend of eight sen per share for the second quarter in addition to its first interim dividend of 14 sen per share.

The research house has a slightly higher target price of RM7.35 for the stock, but expected a lacklustre 3Q18.

“In 3Q18, our strategists expect the lacklustre trading mood to continue as some investors may stay sidelined while waiting for the release of the new government’s 100-day progress report or its first budget.”

However, it added that it is positive on the measures such as liberalisation and incentives to increase the vibrancy of the capital market.

CIMB Research said the special dividend could attract buying interest in the stock in the near term.

“This pushes up our target price from RM6.90 to RM7.60.

“Despite the special dividend, Bursa remains a ‘hold’ given concerns over weak derivative income and possibly lower equity income in 2H18,” the research house said.

Meanwhile, TA Research noted that trading activities for the securities market softened in the second quarter, boosted by an outflow of foreign funds during the quarter.

Total net outflows year-to-date stood at RM6.8bil versus net inflows totalling RM10.8bil in 2017.

“While sentiments remain resilient, we foresee trading volatility to continue in 2H18, dampened by ongoing trade tensions and tightening of global monetary policies.

“In the derivatives market, management expects the introduction of US dollar-denominated refined, bleached and deodorised palm olein futures contract to attract new participants, improve arbitrage opportunities and assist in managing palm oil refining margins.”

Shares of Bursa closed three sen higher to RM7.82, giving the stock a market cap of RM6.31bil.

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