Planned Multi-Asset Exchange And ESG Platforms Will Transform Malaysia's Market By 2026

Key Takeaways

• Expansion into ESG and structured products is expected to boost trading activity and revenue across several segments.
  
• Government reforms and a robust IPO market are projected to enhance revenue streams and investor confidence.
  
• Rising geopolitical tensions, inflation, and increasing costs threaten Bursa Malaysia's revenue and margins amid volatile market conditions and reliance on domestic investment stability.

Catalysts

An exchange holding company, provides treasury management, and management and administrative services.

• Bursa Malaysia plans to expand its product and service offerings, which include the launch of ESG ETFs, commodity structured warrants, and enhancements to existing offerings like single stock futures. This is expected to drive increased trading activity and revenue from both trading and non-trading segments.
  
• The IPO market has shown exceptional performance, with plans for more than 60 IPOs raising MYR 40.2 billion in total market capitalization in 2025, which could significantly boost listing and issuer services revenue.
  
• The planned development of a multi-asset exchange by 2026, aiming to provide a wide range of capital market products, may enhance earning streams by attracting diverse investor segments and increasing transaction volumes.
  
• Sustainability initiatives, such as the Centralized Sustainability Intelligence platform and enhanced ESG requirements, could improve investor confidence and attract ESG-focused funds, likely positively impacting market activity and trading revenue.
  
• The ongoing government reforms and favorable economic policies—in line with frameworks like the Malaysia Plan and various national strategies—are anticipated to bolster economic growth, potentially increasing Bursa Malaysia's net margins through higher trading volumes and investment flows into the market.

Bursa Malaysia Berhad Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Bursa Malaysia Berhad's revenue will grow by 2.2% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 39.7% today to 39.0% in 3 years time.
• Analysts expect earnings to reach MYR 326.2 million (and earnings per share of MYR 0.4) by about February 2028, up from MYR 310.1 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting MYR372.4 million in earnings, and the most bearish expecting MYR285.2 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 30.7x on those 2028 earnings, up from 21.9x today. This future PE is greater than the current PE for the MY Capital Markets industry at 10.4x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.23%, as per the Simply Wall St company report.

Bursa Malaysia Berhad Future Earnings Per Share Growth

Risks

• Rising geopolitical tensions, particularly between major powers like the U.S. and China, could disrupt trade investment decisions, leading to greater volatility in the market and potentially impacting market activity and revenue.
  
• Fluctuating interest rate policies and persistent inflationary pressures could negatively affect economic stability, impacting investor confidence and Bursa Malaysia's earnings.
  
• The increasing operating expenses, particularly due to higher staff and technology costs, could squeeze net margins if revenue growth does not keep pace.
  
• The Malaysian market's dependency on domestic liquidity and government-led investments might pose a risk if there are economic downturns or policy changes, potentially affecting revenue streams.
  
• The challenge of successfully onboarding more companies onto the Centralized Sustainability Intelligence platform and meeting enhanced sustainability reporting requirements may incur additional costs and could impact net margins if not managed efficiently.

Valuation

• The analysts have a consensus price target of MYR9.487 for Bursa Malaysia Berhad based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of MYR11.3, and the most bearish reporting a price target of just MYR7.7.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be MYR835.7 million, earnings will come to MYR326.2 million, and it would be trading on a PE ratio of 30.7x, assuming you use a discount rate of 9.2%.
  
• Given the current share price of MYR8.4, the analyst price target of MYR9.49 is 11.5% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.