This document provides an overview of Bulgaria and its economy. Some key points: - Bulgaria has a population of 7.3 million people and its currency is the lev, which is pegged to the euro. It has been a member of NATO and the EU since 2004 and 2007 respectively. - Bulgaria has a well-educated workforce, low costs of doing business including favorable tax rates and rents, and a strategic location providing access to key European and Middle Eastern markets. - The economy has grown in recent years and outperformed the EU average. Unemployment is decreasing and inflation is low. The government maintains fiscal discipline with a low debt level. - Major industries include manufacturing, trade, mining, and tourism

1. WHY BULGARIA / November, 2016
1
BULGARIA IN BRIEF
 Territory – 110 994 sq. km.
 Population – 7.364 mln, 72.5% urban
 Political system – Parliamentary Republic
POLITICAL AND BUSINESS STABILITY
 Member of the EU (2007), NATO (2004) and WTO (1994)
 Currency board arrangement, strongly supported by all institu-
tions. The Bulgarian lev is pegged to the Euro at 1.95583
 The only country in the EU with a credit rating upgrade by
Moody’s for the period 2010 - 2013.
 Current credit rating: Moody’s: Baa2; S&P: BB+; Fitch: BBB-
HUMAN RESOURCES
 Well educated, highly skilled and multilingual workforce.
98% of the high school students study a foreign language
 62.2 % of the total population is in working age
 Most competitive cost of labor in CEE
LOW COST OF DOING BUSINESS
 Most favorable tax regime in Europe. Corporate income
tax rate is 10%, the lowest in the EU
 Personal income tax is 10 %, flat rate. Industries in high-
unemployment areas are granted 0% tax rate
 0% tax on capital gains
 5% withholding dividend tax
 One of the most competitive costs of labor in Central and
Eastern Europe
 Favorable office rents and low cost of utilities. Cost of
electricity for industrial users is 70% of the European average
 Financial grants for education, R&D projects and manu-
facturing projects; R&D expenditure write-off; 2-year VAT
exemption for imports of equipment; Tax depreciation;
Subsidies for infrastructure; Accelerated administrative
services etc. (according to the Investment Promotion Act)
STRATEGIC LOCATION
 Located at the heart of the Balkans, Bulgaria is a strategic lo-
gistics hub
 Five Pan-European corridors pass through the country
ACCESS TO KEY MARKETS
 European Union - zero tariff market with population of 500M
 CIS – still not well penetrated market with a high potential
 Turkey - zero tariff market of near 80 million population
 Middle East – a market with high purchasing power
 North African market
SOME ALREADY SUCCESSFUL BUSINESSES
 Siemens, Coca-Cola, IBM, Unicredit, ABB, HP, Aurubis,
Lufthansa, Raiffeisen, Schneider, Festo, Nestle, Danone,
Hyundai, Lukoil, Johnson Controls, Yazaki, Great Wall,
Metro, Citi, KRAFT, BNP, IXETIC, Grammer, Kaufland etc.
KEY Indicators 2014 2015 2016f 2017f 2018f
GDP (EUR bln.) 42.7 44.2 45.4 47.2 49.3
GDP growth (%) 1.5 3 2.6 2.5 2.7
GDP pet capita (EUR) 5 810 6 136 6 265 6 419 6 693
Private consumption 2.2 0.7 1.5 2.7 2.5
Fixed capital formation 3.4 2.5 0.1 1.1 3.2
Exports -0.1 7.6 4.4 3.9 4.1
Imports 1.5 4.4 3.5 3.8 4.1
Inflation rate (annual, %) -1.6 -1.1 -1 1.5 1.6
Unemployment (%) 11.4 9.1 8.1 7.3 6.8
Government deficit (-) (surplus) (+) (% of GDP) -3.7 -2.1 -2 -1.4 -1
Government debt (% of GDP) 26.9 26.7 29.2 25 25
EUR/BGN rate (fixed) 1.95583 1.95583 1.95583 1.95583 1.95583
FDI (% of GDP) 3.6 3.6 3.7 3.7 3.8
Copporate lending (real) -10.8 -1.8 0 2.9 4.9
Household lending (real) -1.6 -1.3 0.4 3.3 3.8
Source: Bulgarian National Bank, National Statistical Institute, Ministry of Finance, Eurostat, ELANA forecast
Comparison of GDP Growth of Bulgaria vs EU
 Bulgarian economy has outperformed EU’s overall real growth every
year since 2004 except for 2009 and 2010
 Economy’s performance is to follow developed markets closely on ris-
ing export orders and improving labor market
 Russian/Ukraine conflict uncertainty was easily overcome in 2015
with increased government spending and improving labor market.
Domestic demand is expected to strengthen further in 2016 and
compensate for slower exports and government spending.
6.9%
5.8%
-5.0%
0.7%
2.0%
0.5%
1.1%
1.5%
3.0%
2.6%
2.5%
-6%
-4%
-2%
0%
2%
4%
6%
8%
BG, annual growth %
EU, annual growth %

2. WHY BULGARIA / November, 2016
2
Structure of GVA by output in 2014, annual data, percentage share
INCREASING INDUSTRY SHARE
 A strong industrial basis in the country is a condition for boosting
competitiveness, sustainable growth and new jobs
 Bulgaria is among the few EU countries, which have increased not
only the industry share during the last decade, but the manufactur-
ing share of the total GDP – to around 23% in 2015
 In comparison – since 2000 the average share of manufacturing in
EU countries had declined to average 15% of GDP
General government balance, 2013-2015 average, % of GDP; Eurostat
PRESERVED FISCAL DISCIPLINE
 Due to a challenging economic and financial environment over the
last couple of years, including a government support for banks, the
last few governments have been running budget deficits
 Improving revenue collection is a key objective to stimulate the
economy together with better EU funds absorption. Accordingly,
preliminary October 2016 budget numbers came at 3.8% of GDP
budget surplus
 Yet, the government expects to end 2016 with a balanced budget
rather than a 2% planned 2016 deficit and continue gradually de-
creasing the gap to a balance in 2019
Government gross debt in 2015;% of GDP; Eurostat
LOW GOVERNMENT DEBT
 Since 1999, Bulgaria has managed to reduce the ratio of govern-
ment debt to GDP from around 80% to below 30%
 Growing economy and tight fiscal discipline contributed to low debt-
to-GDP ratio vs EU average
 Bulgaria has the lowest debt-to-GDP ratio in EU after Estonia and is
among countries with low debt-servicing costs
 New debt issuance is funding the small budget deficits the govern-
ment is running to stimulate economic growth and invest in the
country’s outdated infrastructure
Main export partners in 2015; Exports in EUR m; Eurostat
EU – MAJOR TRADING PARTNER
 Bulgaria has close commercial ties with the EU, which accounts for
around 60% of exports
 During the last few years there is an increase of the share of ex-
ports to countries with higher economic growth potential, such as
Germany and Turkey. 2016 Turkish coup has not affected exports
more than normal trading dynamics
 There is also a shift of the geographical structure of exports to-
wards third markets, especially in Asia
 Exports to China have nearly tripled for the last five years
5.3%
28.3%
66.4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Agriculture Industry Services
2000
2013
+1 p.p.

3. WHY BULGARIA / November, 2016
3
FDI flows by industry, 1996-2014, EUR m
SIGNIFICANT AMOUNT OF FDI IN INDUSTRY
 Industry has attracted 1/3 of the total FDIs for the period, as big-
gest investors are supported through a priority investment scheme
 The freeze of the main tax rates during the crisis ensured a predict-
able business and investment environment
 Bulgaria has significant advantages and investment potential in
Chemistry and related industry; Electrical engineering and electron-
ics; IT; Transport and logistics; Tourism; Food and agriculture; Me-
chanical engineering
 EU co-funding for Bulgaria for next programming period 2014-2020
amounts to EUR 15.9bn (c. 5% of the forecast GDP for the period)
5-year CDS Levels; Bloomberg
STABLE CDS LEVEL
 Bulgarian 5-year USD CDS stands at 166 in June 2016 – one of the
lowest among Frontier/Emerging markets
 It has been permanently below 200 for the last 4 years
 Yields on 10-year BG Government bonds have aggressively fallen
from 7.5% in 2009 to around 2.5% at current market quotes in
June 2016
 In 2015, Bulgaria place EUR 3.1bn in 7-, 12- and 20- year notes at
2%, 2.65% and 3.125% yields, respectively. In 2016, it plans to
tap international market again with a EUR 2bn issue
*As of 1 July 2011 the Japan Credit Rating Agency (JCRA) withdrew its
rating due to termination of contract relations with Bulgaria
GRADUAL UPGRADING OF THE SOVEREIGN CREDIT RATING
 The stable fiscal position of the country in the last 17 years con-
firmed the ability of the several governments to meet their deficit
targets and maintain public finance stability
 2014 political and banking instability affected negatively the coun-
try's credit rating. Nevertheless, the new government is yet to per-
form needed reforms to substantiate a credit rating upgrade.
 In June 2016, the three US credit rating agencies confirmed their
ratings on Bulgaria with stable perspectives citing regulatory and
institutional weaknesses despite stable fiscal position and low
debt/GDP.
 Government Securities (GS) continue to attract significant interest
from banks, pension funds, insurance companies and guarantee
funds
Market capitalization to GDP in 2014, %
HUGE UPSIDE POTENTIALOF MARKET CAP TO GDP RATIO
 Bulgarian capital market capitalization is 10% of the GDP - signifi-
cantly below peer markets in the CEE region
 With the forecasted better market performance in next years, new
interesting IPOs are expected
 The government is expected to sell its stake in different state com-
panies through the stock exchange
12,249
10,834
7,686
6,876
2,062
3,007
0 4,000 8,000 12,000
Manufacturing, energy and
mining
Construction and real estates
Finance
Trade
Telecommunications
Other
Moofy's S&P Fitch JCRA*
Aaa AAA AAA AAA
… … … …
Aa1 AA+ AA+ AA+
Aa2 AA AA AA
Aa3 AA- AA- AA-
A1 A+ A+ A+
A2 A A A
A3 A- A- A-
Baa1 BBB+ BBB+ BBB+ Dec. 2014
Baa2 BBB BBB BBB last change
Baa3 BBB- BBB- BBB-
Ba1 BB+ BB+ BB+
Ba2 BB BB BB
Ba3 BB- BB- BB-
B1 B+ B+ B+
B2 B B B
B3 B- B- B- Dec. 1996
Caa CCC+ CCC CCC
… … … …
Caa D D D
InvestmetgradeSubinvestment
grade
0% 20% 40% 60% 80%
Ukraine
Bulgaria
Romania
Slovenia
Hungary
Greece
Italy
Turkey
Croatia
Poland
Russia
Germany
France

4. BULGARIAN STOCK MARKET / November, 2016
4
STOCK MARKET INFRASTRUCTURE STOCK MARKET SNAPSHOT
Market Operator Bulgarian Stock Exchange- Sofia Market Capitalization EUR 4.7 bln.
Custody Central Depository
Market Capitalization/GDP 10%
Regulator Financial Supervision Commission
Main Index SOFIX
Legislation Fully EU/MIFID Harmonized
Total 2015 turnover EUR 210 m.
Trading platform XETRA (provided by Deutsche Boerse)
Average daily turnover (2015) EUR 850 k.
Bulgarian stock ex-
change shareholder
structure
Government owns 50% (expected privatiza-
tion in the coming years)
Top 10 Average free float 33%
Corporate govern-
ance
National code since 2007, National commis-
sion since 2009, Corporate Governance In-
dex (CGIX) since 2011
SOFIX P/E 10.5
SOFIX P/B 0.90
TOP 5 COMPANIES BY MARKET CAP, (Oct 2016, in EUR m) TOP 5 MOST TRADED STOCKS IN Q3’16 (in EUR m).
Company Name (Ticker) Market Cap Company Name (Ticker) Turnover
Sopharma (3JR) 204 Monbat (5MB) 8.5
Tchaikapharma (7TH) 186 Agria Group Holding (A72) 4.0
Chimimport (6C4) 166 Biovet (53B) 3.46
Monbat (5MB) 153 Chimimport (6C4) 1.68
First Investment Bank (5F4) 134 First Investment Bank (5F4) 1.4
SOFIX BEST PERFORMER IN CEE OVER THE LAST 12M… …. AS WELL AS OVER THE LAST 5 YEARS
Source:Bloomberg
RECENT MARKET PERFORMANCE
 Bulgarian market has outperformed its regional peers YTD and
over the last 5 years three key factors: increased local demand
both from retail and institutional investors, the inception of the
first SOFIX ETF and the attractive market valuation
 Yet, the market has significant long term potential for catching up
with global markets’ recovery
 In 2009, Bulgarian market dropped by 87% from its 2007 peaks.
Currently it has only recovered around 15% from the 2007 peak,
while most of the developed markets have already reached or are
close to their peaks.
 Bulgarian market has also strong potential to increase com-
pared to other frontier markets, as some of attractive frontier
markets, such as Baltic stock markets, are already above their
pre-crisis peak levels
 The stable potential for growth is also based on the already
started gradual increase of the economy and disposable per-
sonal income, as well as the high level of bank deposits of indi-
viduals (50% of GDP)
WIG20
BET
BELEX15
CRO
SOFIX
-10% -5% 0% 5% 10% 15% 20% 25%
60
80
100
120
140
160
180
200
SOFIX BET CRO WIG20 BELEX15

5. BULGARIAN STOCK MARKET / November, 2016
5
Pension funds AUM, EUR bn, FSC
BULGARIAN PENSION FUNDS ASSETS DOUBLED IN FIVE YEARS
 Assets under management of the local pension funds more than
doubled over the last five years to EUR 4.86 bn at the end of 2015
 Pension fund assets to Bulgarian stock exchange market capital-
ization exceeded 100% in 2015
 16% of the pension funds’ assets are in equities and approx. 50%
are in government and government guaranteed debt at the end
of 2015
ATTRACTIVE MULTIPLES POSITION VS THE REGION AND THE WORLD
INDICE COUNTRY P/E* P/B*
SOFIX Bulgaria 10.36 1.10
DAX Germany 19.34 1.64
S&P500 USA 19.92 2.77
WIG 20 Poland 30.21 1.04
ASE Greece n/a 0.49
BET Romania 16.84 0.83
CROBEX Croatia 17.45 1.06
MSCI FM CEE+CIS World 9.03 0.91
*As of November 7th
, 2016, Source: Bloomberg
ELANA TOP PICKS
COMPANY TICKER MARKET CAP
LAST PRICE
(Nov 8, 2016)
1-YEAR PRICE TARGET fP/E RECOMMENDATION
Speedy 0SP BU 192 m 36.10 38.42 15.80 HOLD
Monbat 5MB BU 313 m 8.03 9.45 8.3 BUY
Sopharma 3JR BU 411 m 3.04 3.09 14.56 BUY
Sopharma Trading SO5 BU 197 m 6.00 6.12 11.08 BUY
Bulgarian Real Estate Fund REIT* 5BU BU 45 m 2.25 2.70 (intr.value.) 0.43
(p/b)
BUY
Sirma Group Holding SKK BU 57 m 0.96 1.78 28.2 BUY
P/E ratios are on a forward 12M base; figures are in Bulgarian lev /BGN/*3-for-1 stock split as of Feb 29th
, 2016

6. BULGARIAN STOCK MARKET / November, 2016
6
FIRST ETF IN BULGARIA
EXPAT BULGARIA SOFIX UCITS ETF SEEKS TO TRACK THE PERFORMANCE OF SO-
FIX, THE LEADING MARKET INDEX ON THE BULGARIAN STOCK EXCHANGE.
FUND FACTSHEET
PERFORMANCE, PORTFOLIO BREAKDOWN
AND NET ASSET INFORMATION
OCTOBER, 2016
ALL DATA AS OF OCTOBER 26TH
, 2016
KEY BENEFITS
Full replication of SOFIX’ performance aka direct exposure to 15 best stocks in
Bulgaria.
Direct macro exposure to the Bulgarian economy
Better liquidity vs individual stock position on the Bulgarian Stock Exchange as
the fund has three prime brokers as market makers
Tax efficient as capital gains are not taxed in Bulgaria but special taxation ar-
rangements may prevail for foreign investors
Ease of trading as the fund trades as any other ordinary stock on the market
Potential considerable inflows from local and international institutional investors;
BGN 20m attracted at the beginning Nov. 2016 from local pension funds
KEY SHORTCOMINGS
Short history
Higher expense ratio more in line with a general UCITS mutual fund rather than
an ETF may lead to higher tracking error
Can exhibit higher tracking error as up to 20% of assets can be invested in cash
due to UCITS regulation
FUND PERFORMANCE
Since inception 1M 6M 12M
Fund 3.32% 1.88% n/a n/a
Benchmark 6.23% 2.64% 19.06% 16.66%
PERFORMANCE OVER THE LAST MONTH
Source: Bloomberg
EXCHANGE RATES
EUR/BGN (FIXED): 1.95583
USD/BGN: 1.74239
KEY FACTS
Asset Class Equity
Fund Base Currency BGN
Inception Date Sept. 27th
, 2016
Trading Venue
Bulgarian Stock
Exchange
Benchmark SOFIX Index
ISIN BG900001163
Expense Ratio 1%
Operation expenses 1.5%
Domicile Bulgaria
UCITS Yes
Use of Income Reinvest
Net Assets: BGN 1.97m
Number of Holdings 15
Shares Outstanding 1.88m
BSE Ticker BGX
Bloomberg Ticker BGX BU
Distributor Expat Capital
Market Makers
ELANA Trading;
Benchmark and
FFBH
HOLDINGS (%) SECTORS BREAKDOWN (%)*
Company Ticker SOFIX weight BGX weight
Sopharma 3JR 14.60% 12.56%
Advance Terrafund REIT 6A6 11.84% 9.85%
Chimimport 6C4 10.79% 8.99%
Monbat 5MB 10.28% 8.56%
Stara Planina Hold 5SR 7.58% 6.19%
Albena 6AB 7.38% 6.10%
M+S Hydraulic 5MH 6.00% 4.88%
CB First Investment Bank 5F4 5.32% 4.35%
Holding Varna 5V2 4.46% 3.70%
Neochim 3NB 4.49% 3.68%
Bulgarian Real Estate Fund REIT 5BU 3.97% 3.30%
Industrial Capital Holding 4I8 3.62% 2.98%
Trace Group Hold T57 3.47% 2.94%
CB Central Cooperative Bank 4CF 3.15% 2.61%
Industrial Holding Bulgaria 4I8 3.05% 2.54%
Source: Company data
0
50
100
150
200
250
300
350
400
0.990
0.995
1.000
1.005
1.010
1.015
1.020
1.025
1.030
BGNThousands
Fund Flow (right) BGX NAV SOFIX
Industrials;
40.76%
Healthcare;
12.56%
Real
Estate;
13.15%
Consumer
Discretionary;
9.80%
Financials;
6.96%
Cash;
16.76%

7. BULGARIAN STOCK MARKET / November, 2016
7
1 – year stock performance ELANA AGROCREDIT (0EA BU)
 The first leasing company in Bulgaria specialized in extending
funds to farmers for land acquisition and working capital loans.
 Reaps profits from the ongoing land appreciation as prices in Bul-
garia are still 3x below EU average and the steady EU funding
 Started active operations in 2014. Currently, has a portfolio of
BGN 25m of leasing at an average interest of 9.5%
 Incorporated as a joint stock company, but operates as a REIT
distributing 90% of profits
 5% average DY and 8% average ROE since inception, both to
double with portfolio expansion
1 – year stock performance SOPHARMA TRADING (SO5 BU)
 Leading pharmaceutical distributor in Bulgaria
 Key hospitals’ medicine, equipment and consumables provider;
developing own pharmacy chain; Expanding in Serbia
 8% CAGR of the top line to BGN 600m+ in FY2015 with 15% av-
erage ROE
 Good corporate governance with a constant dividend payout of
80% with 6% average DY over the last five years
 Expected stable market growth of 3-5%, supported by rising
government healthcare spending, outdate hospital infrastructure
and continued consolidation and investment in the sector
1 – year stock performance
MONBAT (5MB BU)
 The largest lead-acid batteries producer in Bulgaria with 9%
CAGR of revenues for the last five years
 Own recycling facilities in Bulgaria, Romania and Serbia, reducing
the risk of lead price volatility and stabilizing profitability at 16-
19% average EBITDA margin
 Excellent market diversification, as the company exports to over
20 countries with key market in Western Europe
 15% average ROE and 3% average DY over the last five years
1 – year stock performance
SPEEDY (0SP BU)
 Leading courier in Bulgaria with a strong position in both B2B and
B2C segments, incl. e-commerce.
 Joined forces with La Poste’s land courier – GeoPost and its DPD
network in Europe. GeoPost has the option to increase its current
stake from 25% to 70% in 2020 at 8x EV/EBITDA.
 In expansion mode with aggressive market penetration in Roma-
nia in 2015
 26% CAGR of revenues over the last five years, including the ac-
quisition of DPD Romania at the end of 2014
 57% average ROE and 4% average DY over the last five years
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
6.00
6.50
7.00
7.50
8.00
8.50
Oct'15 Jan'16 Apr'16 Jul'16 Oct'16
Volume (RS)
Stock price in BGN

8. BULGARIAN STOCK MARKET / November, 2016
8
1 – year stock performance
SIRMA GROUP HOLDING (SKK BU)
 Leading software and product development IT group in Bulgaria
diversified in software engineering, semantic technologies, sys-
tem integration, cloud and mobile solutions, e-government,
CAD/CAM and collocation services
 19% CAGR of revenues over the last five years.
 Raised BGN 11.5m in an IPO in Sofia in the autumn of 2015
 Started expanding in the US in 2015 with key emphasis on the
sales and project management function
 Targets 4x top line expansion by 2020
HIGHEST DIVIDEND PAYERS ON THE MARKET
# COMPANY TICKER
DIVIDEND YIELD*
2011 2012 2013 2014 2015 5 YEAR AVERAGE DY
1 Agrofinance REIT 6AG 3.27% 2.44% 3.23% 2.99% 6.15% 3.62%
2 Sopharma Properties REIT 6S6 2.46% 15.36% 7.03% 6.64% 6.00% 7.50%
3 Hydraulic Elements and Systems 4HE 3.48% 3.01% 1.98% 4.65% 5.97% 3.82%
4 Bulland Investments REIT 5BD 11.28% 10.54% 7.33% 14.60% 5.88% 9.93%
5 Sopharma Trading SO5 9.26% 7.69% 4.51% 4.91% 5.26% 6.33%
6 Stara Planina Hold 5SR 0.66% 0.58% 1.15% 2.39% 5.15% 1.98%
7 Advance Terrafund REIT 6A6 13.23% 18.95% 14.22% 12.24% 4.90% 12.71%
8 M+S Hydraulic 5MH 5.97% 6.47% 3.47% 4.11% 4.32% 4.87%
9 Bulgarian Real Estate Fund REIT 5BU 30.64% 10.64% 4.05% - 4.27% 12.40%
10 Oli&Gas Exploration and Production 4O1 0.00% 0.00% 9.57% 7.66% 4.13% 7.12%
11 Elana Agrocredit 0EA 0.00% 0.00% 0.00% 5.92% 4.12% 5.02%
12 Monbat 5MB 4.18% 3.16% 2.59% 1.83% 3.83% 3.12%
13 Korado 4KX 0.00% 0.00% 0.00% 4.00% 3.60% 3.80%
14 Unipharm 59X 6.58% 1.67% 3.00% 4.65% 3.57% 3.89%
15 Chimimport 6C4 - - - - 3.52% -
16 Elhim Iskra 52E 2.63% 2.81% 1.63% 4.00% 3.38% 2.89%
17 Speedy 0SP 0.00% 5.58% 4.00% 3.23% 3.10% 3.98%
18 Fazerles 4F6 2.40% 1.52% 2.02% 4.00% 2.77% 2.54%
19 Trace Group Hold T57 - 0.84% 1.98% 1.94% 2.70% 1.86%
* Data on 2015
Source: Bulgarian Stock Exchange
Now you know Why Bulgaria, find us at:
DIMITAR GEORGIEV
Head of Trading
direct: +359 2 81 000 25
dept: +359 2 81 000 20
mobile: +359 887 695 745
fax: +359 2 958 15 23
mail: georgievd@elana.net
TATYANA PUNCHEVA-VASSILEVA
Head of Research
direct: +359 2 81 000 24
dept: +359 2 81 000 20
mobile: +359 889 531 209
fax: +359 2 958 15 23
mail: vasileva@elana.net
Research reports on Bulgaria
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