Bursa Malaysia’s "MY Value Up" Initiative Could Drive a Market Re-Rating

CGS International has reiterated its "ADD" call on Bursa Malaysia Bhd with an unchanged target price of RM11.80, expressing strong confidence in the exchange operator’s flagship "MY Value Up" programme. Following a September 3 meeting with over 20 institutional investors to discuss the initiative’s implementation, the research house highlighted that the programme is poised to enhance communication between listed companies and investors, strengthen commitments to shareholder value, and potentially catalyze higher market trading activity. The optimism stems from the belief that greater corporate transparency and a focus on capital efficiency will make Malaysian equities more attractive to both domestic and foreign funds.

A significant development emerging from the discussions is the expansion of the programme’s scope. While initially launched with a select group of 88 companies, participation in MY Value Up will not be restricted to this pilot group. Instead, it will be open to all listed companies on the exchange. This inclusive approach addresses concerns raised by some of the initial 88 participants, who highlighted difficulties in providing certain financial targets, particularly when earnings are volatile due to external factors beyond management'sthe control. By making the framework flexible and voluntary through at least 2026 and 2027, Bursa Malaysia is encouraging broader adoption without imposing rigid mandates that might discourage participation from cyclical or smaller-cap firms.

According to CGS, public-listed companies are expected to begin submitting their value-up plans towards the end of 2026, with the information to be published on a dedicated microsite. This centralized platform will serve as a vital resource for investors, allowing them to easily compare strategies and performance metrics across different sectors. Furthermore, Bursa is considering the introduction of a new index comprising companies that demonstrate strong performance under MY Value Up criteria. Such an index would significantly increase investor visibility for firms that successfully implement measures aimed at improving capital efficiency, transparency, and shareholder returns. It would also provide a benchmark for passive funds and ETFs, potentially driving incremental inflows into high-performing stocks.

CGS views the programme positively because it is designed to improve the transmission of corporate information to investors while encouraging listed companies to make more explicit commitments to maximizing shareholder value. In a market often criticized for low liquidity and limited analyst coverage, such initiatives can help bridge the information gap. The research house believes this could, in turn, support higher equity trading activity on Bursa Malaysia. Consequently, CGS maintains its expectation for an increase in equity average daily value (ADV) in 2026 and 2027, which underpins its positive stance on the exchange operator. Higher trading volumes directly translate to higher revenue for Bursa through transaction fees, creating a virtuous cycle of growth.

Beyond the immediate impact of the MY Value Up programme, CGS identifies potential re-rating catalysts for Bursa Malaysia, including stronger earnings growth and improving returns on equity (ROE). The research house forecasts Bursa’s FY2026 net profit to increase by 19.2%, driven by robust trading activity and diversified income streams. Moreover, ROE is projected to rise significantly to 41.8% by FY2028, up from 29.9% in FY2025. This improvement in profitability metrics suggests that the exchange is becoming more efficient in generating returns for its own shareholders, further justifying a higher valuation multiple.

The RM11.80 target price is based on a dividend discount model using a 9.1% cost of equity and a 4% terminal growth rate, reflecting a balanced view of risk and reward. However, CGS notes that downside risks remain, including a sharp pullback in equity trading activity over the coming quarters due to global macroeconomic uncertainty or a larger-than-expected increase in operating expenses. Despite these risks, the structural improvements brought about by the MY Value Up programme provide a solid foundation for long-term growth. As Malaysian companies become more transparent and investor-friendly, Bursa Malaysia stands to benefit not just as a marketplace, but as a key enabler of national economic value creation.