Bursa Malaysia targets 39 IPOs with RM10b market cap in 2023

This is following the rising interest from SMEs that is seeking listing

BURSA Malaysia Bhd is aiming for 39 new listings with a combined market capitalisation of RM10 billion this year, compared to 35 IPOs with combined market capitalisation of RM11.5 billion in 2022.

Bursa Malaysia chairman Tan Sri Abdul Wahid Omar said there is rising interest from small and medium enterprises (SMEs) seeking listing this year, and this explains the lower estimated combined market capitalisation.

“If you see the first month, in January itself, there were seven listings, six ACE and one on Main Market. Given the level of oversubscription, it has attracted a lot of interest from other SMEs, which is the target market for ACE,” he said.

Bursa Malaysia’s net profit for the fourth quarter ended Dec 31, 2022 (4Q22), declined by 24.5% to RM49 million from RM64.95 million a year ago.

It told the stock exchange that its revenue fell 11.8% to RM145.7 million from RM165.18 million previously.

Bursa Malaysia said its cost-to-income ratio in 4Q22 increased by eight percentage points to 54% compared to 46% in 4Q21 mainly due to lower operating revenue.

In a separate statement, Bursa Malaysia said its board of directors had approved and declared a final dividend of 11.5 sen per share amounting to around RM93.1 million, bringing total dividend payout for the financial year 2022 (FY22) to 26.5 sen per share, including the interim dividend of 15 sen per share paid out in August 2022.

For the 12 months period, its net profit fell 36.22% to RM226.57 million from RM355.25 million a year ago, on the back of a 21.4% drop in revenue to RM603.25 million from RM767.54 million previously.

The decrease was due to a 30.7% drop in overall trading revenue of RM377.1 million, while total operating expenses increased marginally by 1.4% to RM292.7 million from RM288.6 million in FY21.

The securities market trading revenue decreased by 40.5% to RM263.5 million in FY22 compared to RM442.9 million in FY21 due to lower average daily value (ADV) traded for securities market’s on-market trades and direct business transactions.

Meanwhile, the derivatives market trading revenue rose by 11.3% to RM97.2 million in FY22 from RM87.3 million in FY21, in part due to higher collateral management fees earned, as well as higher number of Crude Palm Oil Futures Contract and FTSE Bursa Malaysia KLCI Futures contracts traded.

Bursa Suq Al-Sila’s (BSAS) trading revenue increased by 17.8% to RM16.4 million in FY22 from RM14 million in FY21. 

Abdul Wahid highlighted that the exchange operator enjoyed another year of resilient performance despite challenging global operating conditions, resulting in the softening of trading in the securities market.

“Trading value declined by 41.5% with an ADV of RM2.1 billion in 2022 but this was still higher than pre-pandemic ADV of RM1.9 billion. The derivatives market, however, performed better with average daily contracts increasing by 4.6% from 75,178 contracts in FY21 to 78,621 contracts in FY22.

“Our Commodity Murabahah platform, BSAS, similarly performed well with a 22.3% higher ADV from RM37.3 billion to RM45.6 billion,” he said.

On another note, Bursa Malaysia CEO Datuk Muhamad Umar Swift is expecting ADV of stock trading to improve slightly to between RM2.3 billion and RM2.4 billion this year, up from RM2.07 billion in 2022, supported by gradual improvements in trading activities.

He said with recent improvements in the ringgit and listed companies’ valuations, the stock exchange operator is expecting more foreign and domestic investments going forward.

On the outlook for 2023, Abdul Wahid said Bursa Malaysia’s growth in 2023 is expected to moderate in line with a slower global economy.

“Looking ahead, short-term market volatility is expected to persist in the coming months. Nonetheless, positive and domestic catalysts could boost market sentiment, potentially providing further fundamental support to the domestic market in the medium term,” he said.

Abdul Wahid said the exchange would continue to improvise current offerings while deepening capabilities in venturing into new products and services to enhance market vibrancy.

“Bursa Malaysia will focus on its ongoing Public Listed Companies Transformation Programme to help create a more attractive market and support Malaysia’s economic growth.

“We will also leverage technology and work on innovations to improve customers’ experiences with us and better serve them,” he said. – TMR / pic TMR File