Global Research

2 February 2016

 

Bursa Malaysia

Steady 2015 results despite difficult environment

Q: How did the results compare vs expectations?

A: In line as Bursa reported Q4 15 net profit of RM50.6m (-4.8% YoY) and 2015 full year net profit of RM198.6m (+0.2% YoY) which was 100% and 101% of consensus and UBS forecast. Operating revenue was up 3.5% YoY despite slightly weaker securities trading revenue (due to lower trading participation by retail and domestic institutions) as average daily trading value was RM2.08bn in 2015 vs RM2.16bn in 2014 despite velocity increasing from 29% to 30%.

Q: What were the most noteworthy areas in the results?

A: Derivatives revenue has increased 16.6% as the number of contracts traded in 2015 rose to 14.06m vs 12.46m in 2014 due to the increased volatility in CPO prices and FBM KLCI. Operating cost remained relatively stable (increasing 3.3% YoY) as wage cost increased 4% YoY. The company declared a final dividend of 18 sen bringing the total payout for 2015 to 93% and equivalent to a 4.1% yield.

Q: Has the company's outlook/guidance changed and how will investors react?

A: Management expects similar conditions for 2016 where conditions are expected to remain challenging in view of headwinds from the slowing economy (weak Ringgit, soft commodity prices, difficult capital market conditions). We tweak our earnings lower by 5% and 7% for 2016E and 2017E as we assume ADV at RM2.1bn (30% velocity) and RM2.0bn (28% velocity) respectively. Given that the results were in line, we do not expect the Q4 results to be a catalyst for the share price in the near term. However, for investors focused on the medium term (two to three years), the delivery of stable earnings and a current dividend yield of 4.1% provides reasonable valuation support for the stock while awaiting recovery in market conditions.

Valuation: DCF based price target of RM9.80

Our DCF based 12 month price target of RM9.80 (remains unchanged) is based on medium term growth rate of 5%, a WACC of 8.7% and a terminal growth rate of 3%.

Equities

Malaysia

Investment Services

12-month ratingBuy

12m price targetRM9.80

PriceRM8.40

RIC:  BMYS.KL BBG:  BURSA MK

Trading data and key metrics

52-wk rangeRM8.98-7.64

Market cap.RM4.47bn/US$1.08bn

Shares o/s533m (ORD)

Free float57%

Avg. daily volume ('000)398

Avg. daily value (m)RM3.3

Common s/h equity (12/16E)RM0.82bn

P/BV (12/16E)5.5x

Net debt / EBITDA (12/16E)NM

EPS (UBS, diluted) (RM)

From

To

% ch

Cons.

12/16E

0.41

0.39

-5

0.41

12/17E

0.43

0.40

-7

0.44

12/18E

0.46

0.45

-3

0.37

Chris Oh, CFA

Analyst

chris.oh@ubs.com

+603-2781 1128

Highlights (RMm)

12/13

12/14

12/15

12/16E

12/17E

12/18E

12/19E

12/20E

Revenues

440

471

488

499

509

554

597

643

EBIT (UBS)

210

239

248

256

264

295

320

349

Net earnings (UBS)

173

198

199

208

217

241

261

283

EPS (UBS, diluted) (RM)

0.32

0.37

0.37

0.39

0.40

0.45

0.49

0.53

DPS (RM)

0.51

0.52

0.35

0.36

0.38

0.42

0.45

0.49

Net (debt) / cash

351

214

271

345

319

287

246

193

Profitability/valuation

12/13

12/14

12/15

12/16E

12/17E

12/18E

12/19E

12/20E

EBIT margin %

47.8

50.8

50.8

51.3

51.9

53.2

53.7

54.3

ROIC (EBIT) %

44.9

44.3

43.1

46.7

48.1

48.9

48.1

47.0

EV/EBITDA (core) x

14.8

14.9

15.5

15.1

14.6

13.1

12.1

11.5

P/E (UBS, diluted) x

23.1

21.2

22.4

21.7

20.8

18.7

17.3

16.0

Equity FCF (UBS) yield %

4.4

5.1

4.9

6.9

5.0

5.6

6.1

6.6

Net dividend yield %

6.8

6.6

4.2

4.3

4.5

5.0

5.4

5.8

Source: Company accounts, Thomson Reuters, UBS estimates. Metrics marked as (UBS) have had analyst adjustments applied. Valuations: based on an average share price that year, (E): based on a share price of RM8.40 on 02 Feb 2016 19:56 HKT

 

Investment Thesis

Bursa Malaysia

12-month rating

Buy

12m price target

RM9.80

Investment case

We have a Buy rating as we like the company's relatively strong earnings visibility (especially the company's ability to manage costs), cash generative business model and high dividend payout (providing valuation support). In our view, the risk reward is relatively asymmetrical with more upside surprise (should confidence return and volumes increase) while the downside is limited as current trading volumes already reflect low levels of foreign investor interest in the equity market whilst new listing activity has been very low. Also, assuming a downside scenario of 25% velocity, we estimate the stock would still yield 3.5% at a 95% pay-out.

Upside scenario

Upside valuation of RM11.45 based on DCF. We assume velocity of 34%/34%/34% for 2016/2017/2018 (versus our base case of 30%/28%/30%). In addition, we assume market capitalisation growth of 20%/15%/10% for 2014/2015/2016 (versus our base case of 3%/3%/5%). This implies a 2016- 18E ADV of RM2.6bn, RM3.0bn and RM3.4bn, respectively.

Downside scenario

Downside valuation of RM7.87. We assume velocity of 25%26%/28% for 2016/2017/2018 (versus our base case of 30%/28%/30%). In addition, we assume market capitalisation growth of -10%/0%/0% for 2016/2017/2018 (versus our base case of 3%/3%/5%). This implies 2016- 18E ADV of RM1.6bn, RM1.6bn and RM1.7bn, respectively.

Upcoming catalysts

The release of macroeconomic data—such as announcements related to Fed tapering, Malaysian GDP and oil price movements (rebound/further decline)—could drive higher volatility and volume, announcements on IPO activities and Bursa's monthly market statistics on trading volume.

Business description

Bursa Malaysia (Bursa) is a fully integrated stock exchange. Demutualised in January 2004, Bursa offers a comprehensive range of exchange-related products and services, including trading, clearing, and settlement of securities and derivatives on its exchanges. Bursa is the sole operator of the securities and derivatives exchanges and their clearing houses in Malaysia. Its major shareholders are the Ministry of Finance (19%) and Capital Market Development Fund (19%).

Industry outlook

We have an index target of 1,750 for 2016, representing upside of 3% from end-2015. The outlook for 2016 appears to be challenging due to headwinds from rising US rates, slowing GDP growth in China and a maturing credit cycle. Downward revision in earnings growth for the market is likely to remain a feature for most of 2016 as companies would have to deal with the challenges of lower commodity prices, a weak currency, rising input costs as the government continues to rationalize price subsidies and the goods and services tax introduction since April 2016. We expect these concerns to weigh down on the KLCI and expect Bursa's earnings to increase marginally in 2016 on flattish ADV (of RM2.1bn or velocity of 30%)

Revenues by region (%)

Bursa Malaysia mainly operates in Malaysia.

Profit by market segment, 2015

Chart 21

Source: Company data

Figure 1: 2015 results summary

 

Q414

Q315

Q415

2014

2015

QoQ Ch

YoY Ch

KLCI, period end

1,761.25

1,621.04

1,692.51

1,761.25

1,692.51

4%

-4%

Market cap, period end (RM bn)

1,651.17

1,597.35

1,695.15

1,651.17

1,695.15

6%

3%

Turnover / day (RM mn)

2,000

2,010

2,150

2,160

2,080

7%

-4%

Turnover velocity

28%

29%

30%

29%

30%

3%

3%

Derivatives contracts traded ('000s)

3,440

3,840

3,470

12,460

14,060

-10%

13%

Net clearing fee / turnover (bps)

2.43

2.38

2.34

2.38

2.35

-2%

-1%

Profit & Loss (RMm)

 

 

 

 

 

 

 

Securities-related

58.5

57.3

59.8

239.1

233.0

4%

-3%

Derivatives-related

19.0

24.0

22.1

70.6

86.1

-8%

22%

Stable income

42.2

40.7

43.3

161.5

168.5

6%

4%

Total revenue

119.7

122.0

125.2

471.3

487.7

3%

3%

Total operating expenses

-59.1

-56.9

-65.0

-232.0

-239.7

14%

3%

Operating profits

60.6

65.1

60.2

239.3

247.9

-8%

4%

Non-operating items

4.5

2.4

5.7

13.7

12.7

139%

-7%

Net interest / investment income

4.3

4.4

4.7

18.8

18.2

5%

-3%

PBT

69.4

71.9

70.6

271.8

278.8

-2%

3%

Taxation

-14.9

-18.3

-17.9

-67.7

-72.3

-2%

7%

MI

-1.4

-2.2

-2.0

-5.8

-7.8

-6%

35%

Attributable profit

53.1

51.5

50.6

198.2

198.6

-2%

0%

Basic EPS (sens)

10.0

9.6

9.5

37.2

37.2

-2%

0%

Net DPS (sens)

18.0

0.0

18.0

52.0

34.5

NA

-34%

Net cash

1,058

1,462

1,484

1,058

1,484

2%

40%

of which, maintenance cash (margin funds)

752

1,149

1,119

752

1,119

 

 

Net cash ex-margin deposits

305.7

313.0

364.8

305.7

364.8

 

 

Net cash ex-margin deposits / equity

139%

189%

181%

139%

181%

 

 

Pre-X ROE

28%

27%

25%

26%

25%

 

 

Net cash/shr

0.573

0.586

0.682

0.573

0.682

 

 

 

Source: Company data

Figure 2: 12-month forward PE (x)

 

Figure 3: Bursa's PE premium/(discount) to SGX

Chart 8

 

Chart 10

Source: UBS estimates, Bloomberg

 

Source: UBS estimates, Bloomberg

Figure 4: Quarterly velocity (%)

 

Figure 5: Market foreign ownership (%)

Chart 15

 

Chart 16

Source: Company data

 

Source: Company data

Figure 6: Retail vs. institutions (trading participation)

 

Figure 7: Foreign vs. local (trading participation)

Chart 17

 

Chart 18

Source: Company data

 

Source: Company data

Bursa Malaysia (BMYS.KL)

Income statement (RMm)

12/13

12/14

12/15

12/16E

% ch

12/17E

% ch

12/18E

12/19E

12/20E

Revenues

440

471

488

499

2.3

509

1.9

554

597

643

Gross profit

-

-

-

-

-

-

-

-

-

-

EBITDA (UBS)

245

265

272

280

3.0

288

2.8

320

348

379

Depreciation & amortisation

(35)

(25)

(24)

(24)

0.0

(24)

0.0

(26)

(28)

(30)

EBIT (UBS)

210

239

248

256

3.3

264

3.0

295

320

349

Associates & investment income

0

0

0

0

-

0

-

0

0

0

Other non-operating income

13

14

13

13

0.0

13

0.0

13

13

13

Net interest

22

19

18

16

-12.6

19

22.2

22

23

24

Exceptionals (incl goodwill)

0

0

0

0

-

0

-

0

0

0

Profit before tax

246

272

279

285

2.1

296

4.0

329

356

386

Tax

(66)

(68)

(72)

(68)

5.5

(71)

-4.0

(79)

(85)

(93)

Profit after tax

179

204

206

216

4.8

225

4.0

250

271

294

Preference dividends

0

0

0

0

-

0

-

0

0

0

Minorities

(6)

(6)

(8)

(8)

-2.1

(8)

-4.0

(9)

(10)

(11)

Extraordinary items

0

0

0

0

-

0

-

0

0

0

Net earnings (local GAAP)

173

198

199

208

4.9

217

4.0

241

261

283

Net earnings (UBS)

173

198

199

208

4.9

217

4.0

241

261

283

Tax rate (%)

27.0

24.9

25.9

24.0

-7.5

24.0

0.0

24.0

24.0

24.0

Per share (RM)

12/13

12/14

12/15

12/16E

% ch

12/17E

% ch

12/18E

12/19E

12/20E

EPS (UBS, diluted)

0.32

0.37

0.37

0.39

4.8

0.40

4.0

0.45

0.49

0.53

EPS (local GAAP, diluted)

0.32

0.37

0.37

0.39

4.8

0.40

4.0

0.45

0.49

0.53

EPS (UBS, basic)

0.33

0.37

0.37

0.39

4.8

0.41

4.0

0.45

0.49

0.53

Net DPS (RM)

0.51

0.52

0.35

0.36

4.9

0.38

4.0

0.42

0.45

0.49

Cash EPS (UBS, diluted)1

0.39

0.42

0.41

0.43

4.3

0.45

3.6

0.50

0.54

0.58

Book value per share

1.52

1.41

1.51

1.53

1.5

1.56

1.9

1.59

1.63

1.66

Average shares (diluted)

533.83

535.32

536.69

537.20

0.1

537.20

0.0

537.20

537.20

537.20

Balance sheet (RMm)

12/13

12/14

12/15

12/16E

% ch

12/17E

% ch

12/18E

12/19E

12/20E

Cash and equivalents

351

214

271

345

27.4

319

-7.7

287

246

193

Other current assets

907

947

1,318

1,255

-4.8

1,191

-5.1

1,205

1,207

1,212

Total current assets

1,259

1,161

1,589

1,600

0.7

1,509

-5.7

1,493

1,453

1,405

Net tangible fixed assets

268

254

244

246

1.0

249

1.0

251

254

257

Net intangible fixed assets

43

43

43

43

0.0

43

0.0

43

43

43

Investments / other assets

172

198

210

251

19.4

300

19.5

358

428

513

Total assets

1,742

1,656

2,086

2,141

2.6

2,101

-1.9

2,145

2,179

2,218

Trade payables & other ST liabilities

865

854

1,233

1,265

2.5

1,201

-5.0

1,219

1,224

1,232

Short term debt

0

0

0

0

-

0

-

0

0

0

Total current liabilities

865

854

1,233

1,265

2.5

1,201

-5.0

1,219

1,224

1,232

Long term debt

0

0

0

0

-

0

-

0

0

0

Other long term liabilities

50

40

34

34

0.0

34

0.0

34

34

34

Preferred shares

0

0

0

0

-

0

-

0

0

0

Total liabilities (incl pref shares)

914

894

1,267

1,298

2.5

1,235

-4.9

1,253

1,258

1,265

Common s/h equity

811

749

803

818

1.9

834

1.9

851

870

890

Minority interests

16

14

16

24

50.0

32

34.7

42

52

63

Total liabilities & equity

1,742

1,656

2,086

2,141

2.6

2,101

-1.9

2,145

2,179

2,218

Cash flow (RMm)

12/13

12/14

12/15

12/16E

% ch

12/17E

% ch

12/18E

12/19E

12/20E

Net income (before pref divs)

173

198

199

208

4.9

217

4.0

241

261

283

Depreciation & amortisation

35

25

24

24

0.0

24

0.0

26

28

30

Net change in working capital

(39)

(66)

(2)

94

-

1

-99.3

3

3

3

Other operating

45

69

12

8

-34.4

8

4.0

9

10

11

Operating cash flow

214

227

233

335

43.6

249

-25.5

279

302

327

Tangible capital expenditure

(40)

(13)

(16)

(26)

-68.1

(26)

0.0

(28)

(31)

(33)

Intangible capital expenditure

0

0

0

0

-

0

-

0

0

0

Net (acquisitions) / disposals

0

0

0

0

-

0

-

0

0

0

Other investing

0

0

0

0

-

0

-

0

0

0

Investing cash flow

(40)

(13)

(16)

(26)

-68.1

(26)

0.0

(28)

(31)

(33)

Equity dividends paid

(264)

(277)

(184)

(194)

-5.0

(201)

-4.0

(224)

(242)

(263)

Share issues / (buybacks)

0

0

0

0

-

0

-

0

0

0

Other financing

(369)

(16)

396

(41)

-

(49)

-20.00

(59)

(70)

(84)

Change in debt & pref shares

0

0

0

0

-

0

-

0

0

0

Financing cash flow

(632)

(293)

212

(234)

-

(250)

-6.8

(282)

(312)

(347)

Cash flow inc/(dec) in cash

(458)

(79)

430

74

-82.7

(27)

-

(31)

(41)

(53)

FX / non cash items

338

(58)

(373)

0

-

0

-

0

0

0

Balance sheet inc/(dec) in cash

(120)

(137)

57

74

30.9

(27)

-

(31)

(41)

(53)

Source: Company accounts, UBS estimates. (UBS) metrics use reported figures which have been adjusted by UBS analysts.1Cash EPS (UBS, diluted) is calculated using UBS net income adding back depreciation and amortization.

Bursa Malaysia (BMYS.KL)

Valuation (x)

12/13

12/14

12/15

12/16E

12/17E

12/18E

12/19E

12/20E

P/E (local GAAP, diluted)

23.1

21.2

22.4

21.7

20.8

18.7

17.3

16.0

P/E (UBS, diluted)

23.1

21.2

22.4

21.7

20.8

18.7

17.3

16.0

P/CEPS

19.2

18.7

19.9

19.3

18.7

16.8

15.6

14.4

Equity FCF (UBS) yield %

4.4

5.1

4.9

6.9

5.0

5.6

6.1

6.6

Net dividend yield (%)

6.8

6.6

4.2

4.3

4.5

5.0

5.4

5.8

P/BV x

4.9

5.6

5.5

5.5

5.4

5.3

5.2

5.0

EV/revenues (core)

8.2

8.4

8.6

8.4

8.3

7.6

7.1

6.8

EV/EBITDA (core)

14.8

14.9

15.5

15.1

14.6

13.1

12.1

11.5

EV/EBIT (core)

17.2

16.5

17.0

16.5

15.9

14.3

13.2

12.4

EV/OpFCF (core)

16.1

16.1

16.7

16.2

15.7

14.0

12.9

12.1

EV/op. invested capital

7.7

7.3

7.3

7.7

7.7

7.0

6.3

5.8

Enterprise value (RMm)

12/13

12/14

12/15

12/16E

12/17E

12/18E

12/19E

12/20E

Market cap.

3,991

4,186

4,408

4,474

4,474

4,474

4,474

4,474

Net debt (cash)

(411)

(283)

(243)

(308)

(332)

(332)

(332)

(220)

Buy out of minorities

16

14

16

24

32

42

52

63

Pension provisions/other

29

27

26

26

26

26

26

26

Total enterprise value

3,624

3,944

4,207

4,216

4,200

4,210

4,220

4,343

Non core assets

0

0

0

0

0

0

0

0

Core enterprise value

3,624

3,944

4,207

4,216

4,200

4,210

4,220

4,343

Growth (%)

12/13

12/14

12/15

12/16E

12/17E

12/18E

12/19E

12/20E

Revenue

13.2

7.1

3.5

2.3

1.9

8.9

7.7

7.8

EBITDA (UBS)

15.2

7.8

2.7

3.0

2.8

11.4

8.7

8.9

EBIT (UBS)

17.4

13.7

3.6

3.3

3.0

11.6

8.8

9.0

EPS (UBS, diluted)

14.7

14.2

-0.1

4.8

4.0

11.2

8.2

8.5

Net DPS

88.9

2.0

-33.7

4.9

4.0

11.2

8.2

8.5

Margins & Profitability (%)

12/13

12/14

12/15

12/16E

12/17E

12/18E

12/19E

12/20E

Gross profit margin

-

-

-

-

-

-

-

-

EBITDA margin

55.8

56.1

55.7

56.1

56.6

57.8

58.4

58.9

EBIT margin

47.8

50.8

50.8

51.3

51.9

53.2

53.7

54.3

Net earnings (UBS) margin

39.4

42.1

40.7

41.8

42.6

43.5

43.7

44.0

ROIC (EBIT)

44.9

44.3

43.1

46.7

48.1

48.9

48.1

47.0

ROIC post tax

32.8

33.3

32.0

35.5

36.6

37.2

36.5

35.7

ROE (UBS)

20.7

25.4

25.6

25.7

26.2

28.6

30.3

32.1

Capital structure & Coverage (x)

12/13

12/14

12/15

12/16E

12/17E

12/18E

12/19E

12/20E

Net debt / EBITDA

(1.4)

(0.8)

(1.0)

(1.2)

(1.1)

(0.9)

(0.7)

(0.5)

Net debt / total equity %

(42.5)

(28.1)

(33.1)

(41.0)

(36.8)

(32.2)

(26.7)

(20.3)

Net debt / (net debt + total equity) %

(73.8)

(39.1)

(49.4)

(69.5)

(58.2)

(47.5)

(36.4)

(25.4)

Net debt/EV %

(9.7)

(5.4)

(6.4)

(8.2)

(7.6)

(6.8)

(5.8)

(4.4)

Capex / depreciation %

114.7

50.6

65.4

110.0

110.0

110.0

110.0

110.0

Capex / revenue %

9.1

2.7

3.2

5.2

5.1

5.1

5.1

5.1

EBIT / net interest

NM

NM

NM

NM

NM

NM

NM

NM

Dividend cover (UBS)

0.6

0.7

1.1

1.1

1.1

1.1

1.1

1.1

Div. payout ratio (UBS) %

156.9

139.9

92.8

92.9

92.9

92.9

92.9

92.9

Revenues by division (RMm)

12/13

12/14

12/15

12/16E

12/17E

12/18E

12/19E

12/20E

Others

440

471

488

499

509

554

597

643

Total

440

471

488

499

509

554

597

643

EBIT (UBS) by division (RMm)

12/13

12/14

12/15

12/16E

12/17E

12/18E

12/19E

12/20E

Others

210

239

248

256

264

295

320

349

Total

210

239

248

256

264

295

320

349

Source: Company accounts, UBS estimates. (UBS) metrics use reported figures which have been adjusted by UBS analysts.

Forecast returns

Forecast price appreciation+16.7%

Forecast dividend yield4.3%

Forecast stock return+21.0%

Market return assumption9.2%

Forecast excess return+11.8%

Valuation Method and Risk Statement

We value Bursa Malaysia on a DCF. Its revenue depends on clearing fees, which are driven by trading turnover on the securities market. Therefore, the company is subject to the volatility of the local stock market, the outlook for which depends primarily on local economic conditions, the attractiveness of companies listed on the Malaysian stock exchange, and other factors, such as foreign capital flows.

Required Disclosures

This report has been prepared by UBS Securities Malaysia Sdn Bhd., an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates are referred to herein as UBS.

For information on the ways in which UBS manages conflicts and maintains independence of its research product; historical performance information; and certain additional disclosures concerning UBS research recommendations, please visit www.ubs.com/disclosures. The figures contained in performance charts refer to the past; past performance is not a reliable indicator of future results. Additional information will be made available upon request. UBS Securities Co. Limited is licensed to conduct securities investment consultancy businesses by the China Securities Regulatory Commission. UBS acts or may act as principal in the debt securities (or in related derivatives) that may be the subject of this report.

Analyst Certification: Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers and were prepared in an independent manner, including with respect to UBS, and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report.

UBS Investment Research: Global Equity Rating Definitions

12-Month Rating

Definition

Coverage1

IB Services2

Buy

FSR is > 6% above the MRA.

48%

36%

Neutral

FSR is between -6% and 6% of the MRA.

39%

28%

Sell

FSR is > 6% below the MRA.

12%

22%

Short-Term Rating

Definition

Coverage3

IB Services4

Buy

Stock price expected to rise within three months from the time the rating was assigned because of a specific catalyst or event.

<1%

<1%

Sell

Stock price expected to fall within three months from the time the rating was assigned because of a specific catalyst or event.

<1%

<1%

Source: UBS. Rating allocations are as of 31 December 2015.
1:Percentage of companies under coverage globally within the 12-month rating category.

2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within the past 12 months.

3:Percentage of companies under coverage globally within the Short-Term rating category.

4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided within the past 12 months.

KEY DEFINITIONS: Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12 months. Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a forecast of, the equity risk premium). Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are subject to possible change in the near term, usually in response to an event that may affect the investment case or valuation. Short-Term Ratings reflect the expected near-term (up to three months) performance of the stock and do not reflect any change in the fundamental view or investment case. Equity Price Targets have an investment horizon of 12 months.

EXCEPTIONS AND SPECIAL CASES: UK and European Investment Fund ratings and definitions are: Buy: Positive on factors such as structure, management, performance record, discount; Neutral: Neutral on factors such as structure, management, performance record, discount; Sell: Negative on factors such as structure, management, performance record, discount. Core Banding Exceptions (CBE): Exceptions to the standard +/-6% bands may be granted by the Investment Review Committee (IRC). Factors considered by the IRC include the stock's volatility and the credit spread of the respective company's debt. As a result, stocks deemed to be very high or low risk may be subject to higher or lower bands as they relate to the rating. When such exceptions apply, they will be identified in the Company Disclosures table in the relevant research piece.

Research analysts contributing to this report who are employed by any non-US affiliate of UBS Securities LLC are not registered/qualified as research analysts with FINRA. Such analysts may not be associated persons of UBS Securities LLC and therefore are not subject to the FINRA restrictions on communications with a subject company, public appearances, and trading securities held by a research analyst account. The name of each affiliate and analyst employed by that affiliate contributing to this report, if any, follows.

UBS Securities Malaysia Sdn Bhd.: Chris Oh, CFA.

Company Disclosures

Company Name

Reuters

12-month rating

Short-term rating

Price

Price date

Bursa Malaysia

BMYS.KL

Buy

N/A

RM8.40

29 Jan 2016

Source: UBS. All prices as of local market close.
Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock pricing date

Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report. For a complete set of disclosure statements associated with the companies discussed in this report, including information on valuation and risk, please contact UBS Securities LLC, 1285 Avenue of Americas, New York, NY 10019, USA, Attention: Investment Research.

Bursa Malaysia (RM)

Source: UBS; as of 29 Jan 2016

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