Bursa Q1 profit drops to RM42mil
By ELAINE ANG
PETALING JAYA: Escalating US subprime-related issues and local political concerns saw stock exchange operator Bursa Malaysia Bhd’s net profit shrinking 40% to RM42.1mil in the first quarter ended March 31 versus the same quarter of 2007.
Revenue fell 25.6% to RM101.3mil from RM136.1mil before while earnings per share dropped to 8 sen from 13.5 sen.
Bursa attributed its dismal performance mainly to a decrease in trading revenue from the equity market as a result of investor caution.
It said the equity market recorded a velocity for on-market trades (OMT) of 46% (first quarter 2007: 68%) and a daily average trading value for OMT and direct business trades of RM2bil (first quarter 2007: RM2.8bil).
“The lower trading value, change in trading pattern and revision in the clearing fee structure to 0.03% from Jan 1 resulted in a 44% decrease in equity trading revenue to RM48.9mil in the first quarter compared with the first quarter last year,” it added.
The KL Composite Index has fallen 12.28% year-to-date to 1,267.65 points yesterday.
TA Securities said in a research note that Bursa’s first-quarter earnings were pretty weak and expected to see turnover continue to fall.
It said the change in clearing fees structure would have a negative impact on Bursa’s future revenue with retail participants having fallen to 25% in March from 33% in the fourth quarter last year.
“We are maintaining our earnings forecast of RM211mil for (the financial year ending Dec 31) FY08 and RM208mil for FY09. On April 10, we reduced our velocity rate assumption for FY08 to 45% from 55% previously and cut our FY09 velocity assumption to 43%,” it said.
An analyst from Aseambankers said Bursa’s performance was below expectation as the first-quarter result was only 23% of its full-year net profit forecast of RM183mil – a revision of 31% of its earlier forecast – and 17% of the market’s forecast of RM243mil.
“Our house view is that the market will continue to be weak in the second and third quarters before experiencing a slight rebound in the fourth quarter,” she said, adding that there would be a revision in net profit forecast from Aseambankers.
Bursa said developments on the local political front were expected to continue to influence market performance in the remaining quarters although underlying economic and business fundamentals remained intact.
“Despite the less favourable global and local market conditions, the group will continue to roll out initiatives which are expected to enhance the performance of the equity and derivatives markets.
“If market conditions pick up in the remaining quarters, the group’s financial performance is expected to improve,” it said.
However, it cautioned that should current global and local market sentiments not improve, it would be a challenge for the group to achieve its targets for the year – 56% velocity for OMT and 50% growth in derivative contracts.
Bursa shares closed unchanged at RM8.85 with 1.6 million shares traded yesterday.
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