KUALA LUMPUR (Oct 24): TA Securities Research has upgraded Apex Equity Holdings Bhd (AEHB) to “hold” at RM1.09 with an unchanged target price of RM1.19, and said AEHB’s revival of money lending operations in the third quarter of 2022 (3Q2022) has contributed healthily to the company’s financial performance, generating revenues of RM3.4 million and a profit before tax (PBT) of RM1.9 million in AEHB’s results for the most recent first half of the year 2023 (1H2023).

In a note on Tuesday, TA Securities mentioned that it expects a slight uptick in AEHB’s sequential brokerage income for the upcoming third quarter (3Q) results, driven by the anticipation of increased trading activities during the quarter.

“We estimate that the trading velocity of securities on the stock exchange has risen to approximately 28%, up from 26% in the second quarter (2Q). We believe that sentiments improved in 3Q, attributed to a more favourable political environment, as voters opted for political stability in the recent state elections.

“We also predict that the improved market sentiment and increased trading activities will spur margin interest income. We note that this segment of AEHB’s stock and securities broking business has been improving, rising by 24.6% year-on-year (y-o-y) in 1H2023.” it said.

With this, it maintained the current forecast and foresees modest earnings growth for AEHB in FY2023, primarily due to a more stable securities market and the ongoing efforts by Bursa to strengthen the trading ecosystem and attract more foreign participation, which will boost trading activities and market volumes.

Additionally, the recent reduction in stamp duty and the continuation of the sales and services tax (SST) exemption on brokerage fees for shares listed on Bursa Malaysia are seen as positive factors contributing to market appeal.

As a result, it maintains its assumption that the trading velocity in the securities market will remain stable at 28% from FY2023 to FY2025.