Malaysia’s stock exchange saw a total of 55 initial public offerings (IPOs) in 2024, the highest number in 19 years, smashing the bourse’s guidance of 42 IPOs. Bursa Malaysia now sees 60 potential IPOs in 2025, and CGS International (CGSI) analyst Winson Ng is projecting “healthy” 7.1% net profit growth in FY2025 ending Dec 31.
With the “robust IPO trend”, Ng is maintaining his “add” call on the stock exchange operator, which is itself listed on Bursa. In a Jan 9 note, Ng raised his target price to RM11.30 ($3.42) from RM11.10 previously. The new target price represents a 30% upside from Bursa’s Jan 10 close of RM8.70.
Bursa participated in CGSI’s Malaysian Corporate Day 2025 on Jan 8, with a one-hour meeting and presentation to 16 institutional investors. Bursa was represented by CEO Muhamad Umar Swift and executive vice-president of investor strategy and development Stephanie Tan.
The Bursa executives highlighted the 55 debuts across its three listings boards in 2024: 11 on the Main Market, 40 on the ACE Market and four on the LEAP Market. Together, this was the highest number of IPOs in 19 years, after Bursa’s 79 IPOs in 2005.
Looking at the pipeline of investment banking deals, Bursa sees the potential for 60 IPOs in 2025, but the actual number will depend on the timing the companies aim to list their stocks, according to Bursa. CGSI’s Ng thinks stock market sentiment will play a bigger role.
Still, Ng is “positive” on Bursa’s view that the re-election of Donald Trump as US President will be “either neutral or positive” for Malaysia’s stock market, in terms of his potential policies.
See also: Making the Singapore market great again
2024-2026 roadmap
Bursa’s executives also discussed the bourse’s 2024-2026 “strategic roadmap”, which is built on three pillars.
Firstly, Bursa has been focusing on product expansion, launching new thematic exchange-traded funds (ETFs); introducing new edible oil derivative products and relaunching single stock futures with enhanced product specification; and broadening product and solution offerings on its platforms.
See also: Interview with Umar Swift: Compared to SGX, why is Bursa Malaysia doing so well?
The latter includes the auction of Malaysia-generated solar, bioenergy and hydropower Renewable Energy Certificates (RECs) on the Bursa Carbon Exchange.
Bursa also issued investment notes on BR Capital, a debt fundraising and investing platform incorporated in December 2022. According to Bursa, BR Capital helps both listed and unlisted small- and mid-sized companies tap into a “new pool of capital” outside the traditional wholesale markets.
“It offers a new avenue and greater flexibility to these companies to raise funds. It also provides opportunities to investors to invest in previously untapped fixed income investments (mid-market debts),” according to Bursa.
Bursa holds a 51% equity interest and the unlisted RAM Holdings owns the remaining 49% stake in this entity.
Secondly, Bursa has been working on developing the bourse ecosystem by onboarding corporates and their suppliers into a central sustainability data collection platform.
Bursa has also been developing “facilitative frameworks or guidance to boost market vibrancy and trading”. One such move was to allow fractional shares trading starting September 2023.
Lastly, Bursa says it plans to upgrade its customer support system to help resolve customer queries through a new help centre.
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‘Healthy’ net profit
Bursa Malaysia is expected to release its financial results for FY2024 ended Dec 31, 2024 by the end of January.
While CGSI’s Ng forecasts a “healthy” net profit growth of 7.1% for Bursa in FY2025, this is slower than Ng’s projected increase of 20.4% in FY2024. “We expect average daily value (ADV) of RM3.29 billion in FY2025 for the equity market, vs. our forecast of RM3.04 billion in FY2024.”
Still, Ng is “positive” on the equity market outlook in FY2025, which is positive for Bursa’s revenue. Potential catalysts include an expansion in Bursa’s return on equity (ROE) from 31.4% in FY2023 to 38.3% in FY2026, based on CGSI’s forecasts. Downside risks include a drastic decline in equity ADV and wider-than-expected increase in Bursa’s overheads in FY2025-2026, says Ng.
Meanwhile, the Singapore Exchange (SGX Group) will release its financial results for 1HFY2025 ended Dec 31, 2024 in early February. SGX’s financial year ends in June.
CGSI’s last report on Singapore’s bourse operator was released on Oct 9, 2024, with a “hold” call and a $12.50 target price. SGX saw just four listings in 2024, the worst performance since 2011.
SGX shares closed 32 cents lower, or 2.56% down, at $12.15 on Jan 10 amid a broader correction for Singapore’s three bank stocks; the Straits Times Index closed 61 points lower, or 1.58% down, at 3.801.56 points that same day.
Still, SGX shares have risen some 23% over the past year; it began its advance in August 2024 after an equities market review group was announced to explore ways to improve liquidity.
Shares in Bursa, meanwhile, closed RM7 higher, or 0.81% up, at RM8.70 on Jan 10. Bursa shares are up 19% over the past year.
Read more about the ongoing SGX equities market review group:
- SGX Group chairman calls for ‘bold and decisive actions’ to solve stock market’s ‘longstanding issues’ (January)
- ‘Not practical’ to rely on sovereign wealth to support, sustain Singapore equities: Gan Kim Yong (January)
- Revitalising Singapore equities market ‘not an easy task’, says Chee Hong Tat (September 2024)
- MAS’s equities market review group holds first meeting, unveils 31 workstream members (August 2024)
- MAS launches review group to improve the Singapore equities market after months of speculated proposals (August 2024)
Revisit our cover story from October 2024 in Issue 1160:
