BURSA is Malaysia's sole stock exchange that provides listing, trading, clearing and settlement services. It enjoys wide economic moats as the monopoly exchange. In FY2015, BURSA reported record net income of RM198.6 million despite a challenging market environment. However, it faces risks from a potential lack of new listings and weak retail participation on the exchange. Going forward, BURSA aims to drive growth through new product offerings and expanding its regional presence.

1. BURSA
FUNDAMENTAL ANALYSIS
Financial Year 2015 (31 December 2015)
6 March 2016
L. C. Chong (http://lcchong.wordpress.com and https://goo.gl/jjkq4P)

2. DISCLAIMER
I am NOT an investment advisor nor a financial advisor, and no information provided
here is to be interpreted as a suggestion to buy or sell securities.
You and I may have different opinion, but I respect your opinion.
All figures in MYR and in '000s, except per share data
2

3. DECLARATION OF INTEREST
• At the time of writing, I owned shares of BURSA.

4. SCOPE
• Figures and ratios are based on the figures reported in Annual Report or the latest
Q4 Quarterly Report (QR)
• Unless there is a need, this analysis will not include financial figures reported in Q1,
Q2 and Q3
• I will provide QR result highlights in my blog
• Valuation is not covered in this analysis
• I will provide valuation in my blog.

5. CHANGES
• 13 Feb 2015 – FY15 results
• 21 Oct 2015 – First write up of BURSA in PowerPoint format
• 9 Dec 2015
• Applied new template
• Change presentation of some data.

6. BUSINESS PROFILE

7. BUSINESS PROFILE
• An exchange holding company, whose principal activities are treasury management
and the provision of management and administrative services to its subsidiaries
• Operates and regulates a fully-integrated exchange, offering a range of exchange-
related facilities including listing, trading, clearing, settlement and depository
services
• Offers its products covering equities, derivatives, offshore listings and services and
bonds and Islamic offerings.

8. BUSINESS PROFILE (CONT.)
Securities
Comprises the provision and operation of the listing, trading, clearing, depository
services and provision and dissemination of information relating to equity securities
quoted on exchanges for the securities market
Derivatives
Comprises the provision and operation of the trading, clearing, depository services
and provision and dissemination of information relating to derivative products quoted
on exchanges for the derivatives market
Others
Comprises the provision of a Shari’ah compliant commodity trading platform, a
reporting platform for bond traders and the provision of an offshore market

9. OWNERSHIP SUMMARY
INSTITUTIONS
60%
PUBLIC AND OTHER
20%
CORPORATIONS (PRIVATE)
19%
CORPORATIONS (PUBLIC)
1%
INDIVIDUALS/INSIDERS
0%
Position Date: 21 Jan 2016

10. TOP 5 SHAREHOLDERS
Position Date: 21 Jan 2016
Holder Common Stock Held % of Total Shares Outstanding
KUMPULAN WANG PERSARAAN 105,830,400 19.8%
CAPITAL MARKET DEVELOPMENT
FUND 100,200,001 18.7%
JPMORGAN CHASE & CO, PRIVATE
BANKING AND INVESTMENT
BANKING INVESTMENTS 46,094,582 8.6%
EMPLOYEES PROVIDENT FUND OF
MALAYSIA 39,018,194 7.3%
PERMODALAN NASIONAL BERHAD 32,472,000 6.1%

11. OWNERSHIP ANALYSIS
• BURSA issued ordinary shares to employees every year, and also there are potential
ordinary shares which may arise from the SGP grants. Dilution of EPS is not
significant.

12. OWNERSHIP ANALYSIS (CONT.)
528,000
530,000
532,000
534,000
536,000
538,000
12/31/2010 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015
Weighted NOSH
Weighted NOSH Weighted NOSH (Diluted)

13. ECONOMIC MOATS

14. ECONOMIC MOATS
• Cost Advantage (Wide)
• BURSA is the one and only stock exchange in Malaysia. Its pre-tax margin throughout
the years are consistently above 50%
• Switching Costs (Wide)
• The sole fully-integrated exchange in Malaysia
• Network Effect (Wide)
• The sole fully-integrated exchange in Malaysia.
• It has a niche in Islamic investment products
• It has the largest derivatives exchange dealing palm oil contracts.

15. ECONOMIC MOATS (CONT.)
• Intangible Assets (Wide)
• The sole fully-integrated exchange in Malaysia
• Efficient Scale (Wide)
• Malaysia unlikely to have two exchanges
• Any company wants to be listed in Malaysia stock exchange must go through BURSA.

16. ECONOMIC MOATS (CONT.)
2011-12-31 2012-12-31 2013-12-31 2014-12-31 2015-12-31
ROIC 37.0% 40.3% 43.7% 46.3% 52.5%
CROIC 46.6% 44.0% 45.1% 46.7% 50.7%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
ROIC and CROIC
The wide economic moats are further
proven with high ROIC and CROIC.

17. KEY OPERATING DRIVERS

18. KEY OPERATING DRIVERS
Source: BURSA’s Annual Report 2015
Securities Market 2011 2012 2013 2014 2015
FBM KLCI 1,530.73 1,688.95 1,866.96 1,761.25 1,692.51
Market Capitalisation (RM billion) 1,285 1,466 1,702 1,651 1,695
Velocity (%) 33% 28% 30% 29% 30%
Average Daily Trading Value - OMT & DBT (RM million) 1,788 1,666 2,137 2,162 2,080
Average Daily Trading Value - OMT (RM million) 1,699 1,573 1,915 2,053 1,991
Average Daily Trading Volume - OMT & DBT (million shares) 1,344 1,361 1,567 2,157 2,040
Average Daily Trading Volume - OMT (million shares) 1,288 1,294 1,477 2,072 1,966
Retail Participation 26% 23% 22% 26% 23%
Institution Participation 74% 77% 78% 74% 77%
Retail Average Daily Trading Value - OMT (RM million) 442 362 421 534 458
Total Funds Raised (RM billion) 15.0 32.0 22.5 24.3 21.2
Total Listed Counters 1,476 1,640 1,566 1,739 1,739
No. of New Listings - IPOs (including REITs) 28 17 18 14 11
No. of Delistings (including REITs) 43 36 27 21 14
No. of New CDS Accounts opened (yearly) 164,110 207,393 153,764 136,303 153,140
Total CDS Accounts (million) 4.2 4.3 4.4 2.5 2.5

19. KEY OPERATING DRIVERS (CONT.)
• The sharp decline in the number of CDS accounts in 2014 was due to the
implementation of automatic closure of dormant CDS accounts that were
designated as dormant on or before 2010
• This maiden exercise to close such dormant CDS accounts was performed on 25
August 2014 affecting approximately 2.0 million CDS accounts.

20. KEY OPERATING DRIVERS (CONT.)
Source: BURSA’s Annual Report 2015

21. KEY OPERATING DRIVERS (CONT.)
Source: BURSA’s Annual Report 2015
Derivatives Market 2011 2012 2013 2014 2015
Open Interest 152,419 214,065 196,493 196,413 230,376
Crude Palm Oil Futures (FCPO) 112,720 173,649 151,486 166,625 188,888
FBM KLCI Futures (FKLI) 23,505 30,550 40,473 25,476 37,750
Others 16,194 9,866 4,534 4,312 3,738
No. of Contracts Traded
FCPO (million) 5.9 7.5 8.0 10.2 11.0
FKLI (million) 2.5 2.1 2.7 2.2 3.0
3-Month KLIBOR Futures 92,775 50,946 16,791 13,150 1,271
Gold Futures 24,253 111,844 39,974
Other Products (OCPO, OKLI and FPOL) 6,314 7,831 5,558 10,762
Average Daily No. of Contracts Traded 34,474 39,387 43,490 50,654 57,157
Total Contracts Traded (million) 8.4 9.6 10.7 12.5 14.1

22. KEY OPERATING DRIVERS (CONT.)
Source: BURSA’s Annual Report 2015

23. KEY OPERATING DRIVERS (CONT.)
Source: BURSA’s Annual Report 2015
Islamic Market 2011 2012 2013 2014 2015
% of Shari’ah Compliant PLCs 89 88 71 74 74
Bursa Suq Al-Sila’
Average Daily Value Commodity Traded (RM billion) 1.2 2.3 3.9 6.9 15.2
Total Accumulated Commodity Trade Value (RM billion) 298.6 563.3 958.9 1687.9 3,727.70
No. of Sukuk Listings on Bursa Malaysia Securities 19 20 20 20 22
Value of Sukuk Listings (USD billion) 28.5 33.7 32.9 34.2 34.6

24. KEY OPERATING DRIVERS (CONT.)
Source: BURSA’s Annual Report 2015

25. FINANCIAL PERFORMANCE

26. PROFITABILITY
48.1%
49.4%
54.0%
55.4%
55.8%
57.7%
57.2%
42.0%
44.0%
46.0%
48.0%
50.0%
52.0%
54.0%
56.0%
58.0%
60.0%
0
50,000
100,000
150,000
200,000
250,000
300,000
2009-12-31 2010-12-31 2011-12-31 2012-12-31 2013-12-31 2014-12-31 2015-12-31
Pre-tax Income and Margin
Income Before Taxes Pre-Tax Margin %

27. PROFITABILITY (CONT.)
• FY15 net income of RM198.6m (+0.2%yoy) was only marginally higher compared to
the previous financial year’s corresponding period
• Nevertheless, it was still a record high despite the challenging market environment.

28. PROFITABILITY (CONT.)
• From FY11 to FY15, BURSA’s pre-tax income grew 8.4% in CAGR
• Higher participation from local/foreign institutional funds and retails
• Bullish market where FBMKLCI index increased from 1,200 level to 1,600 level
• In the past 10 years, BURSA has been enjoying very high pre-tax margin, and the
margin increased dramatically from FY10 onwards
• BURSA has very high dependency on market sentiment
• Bearish market sentiment reduces participation of trading/investing in market
• This is clearly shown from FY08 to FY10
• Adjusted FY09 pre-tax income by deducting one-time income from disposal of a
subsidiary (FY09: RM75,975 mln).

29. PROFITABILITY (CONT.)
0
100,000
200,000
300,000
400,000
500,000
600,000
2011 2012 2013 2014 2015
Revenue by Operating Segment
Securities Market Derivatives Market Exchange Holding Others

30. PROFITABILITY (CONT.)
• Securities market is the main revenue contributor, but revenue contribution from
derivatives market has been improving over the years
• Evidently, we see 65% YoY (FY15: 17,382 mln; FY14: 10,514 mln) growth of revenue
in Syariah compliant commodity trading platform and the reporting platform.

31. LEVERAGE & COVERAGE
• BURSA has no debt.

32. LIQUIDITY
158,578
147,033
163,050
180,899
202,033
0
50,000
100,000
150,000
200,000
250,000
2011-12-31 2012-12-31 2013-12-31 2014-12-31 2015-12-31
Free Cash Flow to Firm
Growth rate of FCF for 5 years is 6.9%. This is one
of the reasons BURSA can give high dividend
payout.

33. GROWTH DRIVERS

34. GROWTH DRIVERS
• 17 Jun 2014 – For the derivatives market, a new USD denominated Refined Palm
Olein Futures Contract (FPOL) was launched. Bursa also inked an MoU with the
Saudi Stock Exchange (Tadawul) to develop cross border activities in capital market
development. A new Environmental, Social and Governance Index, to be launched in
end-2014, targets Socially Responsible Investments funds estimated at USD3.4tr
• 17 Jul 2014 – For the derivatives market, Bursa introduced the new participantship
structure for trading and associate participants – to increase the number of licensed
traders and expand the distribution channel.

35. GROWTH DRIVERS (CONT.)
• 17 Jul 2014 – More ETFs (exchange traded funds) – a form of passive investment
fund that offers investors benefits of diversification – are also in the works including
for equities, commodities and indices for other stock exchanges. In 1Q14, the MyETF
MSCI Malaysia Islamic Dividend was introduced.

36. ISSUES/RISKS/CHALLENGES

37. ISSUES/RISKS/CHALLENGES
• 8 May 2015 – The number of public listed companies on the local bourse has been
on a downward trend – From 957 companies in 2010, it shrank to 906 last year
• the number of new listings have decreased — there were 29 new listings in 2010
compared with 28 in 2011, 17 in 2012, 18 in 2013 and 14 in 2014.
• Bursa is not the only stock exchange that is seeing a slowdown in IPO exercises this year.
As at end-March, Singapore only had one IPO listing. Meanwhile, the Stock Exchange of
Thailand saw five listings in the first quarter of this year while the Indonesia Stock
Exchange had two.

38. ISSUES/RISKS/CHALLENGES (CONT.)
• The current choppy market environment is likely to stay, driving investors to the
sideline or to exit
• Overall, lackluster trading activities is expected in the securities market over the
short-term
• The participation of retail investors in Bursa remains weak. In 2013, despite the
strong post-election rally across the board, the opening of CDS accounts fell to its
lowest in seven years
• This could mean the rally failed to attract new investors, particularly the younger ones.

39. ISSUES/RISKS/CHALLENGES (CONT.)
26% 23% 22% 26% 23%
74% 77% 78% 74% 77%
0%
20%
40%
60%
80%
100%
2011 2012 2013 2014 2015
Securities Market Trading Participation
Retail Institution

40. ISSUES/RISKS/CHALLENGES (CONT.)
442 362 421
534 458
1,699
1,573
1,915
2,053 1,991
0
500
1,000
1,500
2,000
2,500
2011 2012 2013 2014 2015
Retail ADV vs. Total ADV
Retail Average Daily Value Traded (RM mil) Total Average Daily Value Traded (RM mil)

41. ISSUES/RISKS/CHALLENGES (CONT.)
0
50,000
100,000
150,000
200,000
250,000
2011 2012 2013 2014 2015
0
100
200
300
400
500
600
RM(MIL)
Retail Participation vs. New Account Openings
Retail Average Daily Value Traded (RM mil) No. of new CDS accounts opened

42. GOING FORWARD

43. SHAREHOLDER RETURN
Time Frame Date Bought at Original
Value
Dividend
Received
Unrealized
Gain/Loss
Current
Return
CAGR %
3-Y 14 Feb
2013
6.56 6,560 1,360 1,840 9,760 14.2%
5-Y 14 Feb
2011
8.17 8,170 1,860 230 10,260 4.7%
10-Y 14 Feb
2006
4.68 4,680 3,884 3,720 12,284 10.1%
Assumptions:
1. Commission paid is ignored in this simulation
2. The current price is 8.4 (as of the time of writing)
3. Unit purchased is 1,000.

44. SHAREHOLDER RETURN (CONT.)
0.2430
0.1910 0.2000
0.2600 0.2700
0.3200
0.3400 0.3450
0.0000
0.0500
0.1000
0.1500
0.2000
0.2500
0.3000
0.3500
0.4000
2008-12-31 2009-12-31 2010-12-31 2011-12-31 2012-12-31 2013-12-31 2014-12-31 2015-12-31
DPS (Ex. Special Dividend)
CAGR - 8% Growth
Special
Dividend: 0.20Special Dividend:
0.175

45. DIVIDEND PROPOSAL FY15
• The management has proposed final dividend of 18sen per share, bringing the total
dividends declared to 34.5sen for FY15
• It was slightly higher than the previous year’s dividend of 34.0sen (ex-special
dividend).

46. GOING FORWARD
• This financial year will remain challenging in view of expected softer trading
activities in the near term as sentiments remain depressed by broad macro
uncertainties and concerns over potential outflow in foreign funds in the 2H
• BURSA’s attractive dividend will the main catalyst for the stock
• I will continue to hold and accumulate BURSA as I believe that BURSA has the ability
to overcome the challenges ahead.