KUALA LUMPUR: Traders may take into account positioning themselves in Bursa Malaysia Bhd given the heightened chance of a basic election over the horizon, mentioned Hong Leong Funding Financial institution (HLIB) analysis.
The analysis agency, which notes that the inventory change operator’s 1Q22 earnings prospects will doubtless be sequentially unexciting, believes Bursa may very well be a beneficiary of an early GE15.
“We see upside potential to common every day traded worth (ADV) in 2H22, fueled by heightened buying and selling across the impending basic election, which we’re betting to occur between Aug-Oct (after the MoU expires however earlier than the East Coast monsoon).
“Two out of the previous three GEs (GE14 and GE13) have had a optimistic impact on ADV throughout the election 12 months (YoY enhance) and election month (59-63% mother surge) – the exception was GE12 as a result of onslaught of the GFC,” it mentioned in a word.
HLIB mentioned Bursa is an apolitical play that advantages from a lift in common every day traded worth however with out the political linkages, which makes it a compelling funding proposition.
Past GE15, the dealer mentioned the market may react positively ought to the election end result see the victor safe a convincing mandate, which is believable given the outcomes of the current state polls in Johor, Melaka and Sarawak.
“Though the share worth has risen 9% since our BUY improve on March 16, we proceed to see additional the wrong way up the street as buyers finally begin angling on Bursa with rising chance of an early GE15.
“Our goal PE is raised from 23.3x to 25.5x (+1.5SD above 5Y imply) and consequently, our TP will increase from RM7.27 to RM7.95,” it mentioned.
For 1Q22, HLIB forecasts earnings of RM68mil, which will likely be 5.2% improved quarter-on-quarter and 43.7% decrease year-on-year, representing 27% of its full-year forecast.
“Whereas we word the qoq enhance in ADC (and to a lesser extent, ADV), the influence to bottomline will likely be partially watered down by fewer buying and selling days (61 vs 63).
“On a YoY foundation, the estimated steep decline is moderately anticipated given the abnormally excessive base in SPLY (second strongest quarterly ADV in its historical past) on account of restoration sentiment again then from the worldwide vaccine rollout which drove buying and selling euphoria,” it added.