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Maersk’s Q3 profit up year-on-year, but likely flat sequentially

Bursa Malaysia’s overall profit growth was strong year-on-year (YoY) but likely to be flat on a quarter-on-quarter (QoQ) basis, based on the improved performance of the securities market in the third quarter of 2023 (QoQ 2023). Securities trading revenues are likely to be offset by weak derivatives revenues and higher fees.

In a recent report, RHB Research noted that Bursa Malaysia’s securities average daily value (SADV) for the third quarter of 2023 stood at RM320 million, up 24% sequentially and 17% year-on-year (YoY). The research firm attributed this to renewed investor interest in domestic equities, especially in sectors such as construction and real estate.

Meanwhile, Bursa Malaysia’s derivatives daily average contract (DADC) slipped 3% in the third quarter compared with the same period last year due to a drop in trading volume in gross palm oil futures, although this was partially mitigated by a rise in trading volume in FTSE Loon Composite Index futures. However, derivatives still account for a relatively small proportion of total operating income, so the impact of lower trading volumes on earnings is not expected to be significant.

Maersk’s Q3 profit up year-on-year, but likely flat sequentially

In other highlights, RHB Research said that three new IPOs were added in the third quarter of 2023, bringing the annual total to 25. Bursa Malaysia also claims that it has a healthy pipeline of IPOs to achieve its target of 25 IPOs in 2023, although some of these may extend into 2024.

Overall, RHB Research expects Bursa Malaysia’s total operating income to show strong year-on-year and sequential growth in the third quarter of 2023, offset by an increase in sequential expenses. However, the research firm concludes that overall profits are likely to be flat YoY and strong YoY.

The gist:

SADV on Bursa Malaysia grew 24% YoY and 17% YoY in Q3 2023, driven by renewed investor interest in domestic equities.
Revenue from sales of derivatives declined 3% YoY in 3Q2023, but the impact on earnings is expected to be small due to the relatively small share of derivatives in total operating revenue.
Three new IPO companies will be added in the third quarter of 2023, bringing the total number of IPO companies to 25 for the year.
Strong year-over-year and quarter-over-quarter growth in total operating income is expected in the third quarter of 2023, offset by an increase in quarter-over-quarter expenses.
Overall profits are likely to be flat sequentially and strong year-over-year.
Conclusion:

Bursa Malaysia’s Q3 2023 results are expected to be mixed, with strong growth in securities trading revenues offset by weakness in derivatives revenues and higher expenses. However, overall profit is likely to be flat YoY and strong YoY.

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