Operating Revenue - Bursa Malaysia Berhad

BURSA MALAYSIA BERHAD
CLSA Investors’ Forum, Hong Kong
Dato’ Yusli Mohamed Yusoff, CEO
22 - 26 September 2008
Visit us at http://www.bursamalaysia.com
Bursa Malaysia and its Group of Companies (“the Company”) reserve all proprietary rights to the contents of this Presentation. No part of this Presentation
may be used or reproduced in any form without the Company’s prior written permission.
This Presentation is provided for information purposes only. Neither the Company nor the Presenter make any warranty, express or implied, nor assume
any legal liability or responsibility for the accuracy, completeness or currency of the contents of this Presentation.
It is your responsibility to verify any information before using or relying on it.
Single Exchange Group
Total Market Capitalisation : USD229 bn (RM791 bn) @ 12 September 2008
Equities Market
Derivatives Market
Bond Market
Offshore Market
3 Markets:
9 Derivatives Products:
5 Bond Instruments:
Financial instruments:
¾ Main Board : 637 cos
¾ Second Board : 221 cos
¾ MESDAQ Market : 124 cos
¾ Commodity futures
¾ Equity futures & options
¾ Financial futures
¾M’sia Gov Securities*
¾Gov Investment Issues*
¾Central Bank Papers
¾Cagamas Papers
¾Private Debt Securities
¾Non-ringgit securities
¾Islamic Sukuk cross
listings
Trading
Trading
Order Matching*
Listing
Clearing
Clearing
Negotiation
Clearing
Settlement
Settlement
Reporting
Depository
(Trading)
Depository
Clearing & Depository by :
Citibank & Deutsche
Integration Across Products and Services
2
Board Of Directors And Shareholdings Structure
13
13 Members
Members @
@ 12/9/2008
12/9/2008
¾ 1 Executive Director
¾ 7 Independent Non-Executive Directors
¾ 5 Public Interest Directors (also independent)
Substantial
Substantial Shareholders
Shareholders @
@ 29/8/2008
29/8/2008
Minister of Finance Inc.
19%
Capital Market Development Fund
19%
Newton
9.5%
Foreign
Foreign Shareholding
Shareholding :: 23%
23%
Market Cap of Bursa @ 12/9/2008 :
RM3.4 bn (USD1.0 bn)
3
Operating Drivers
Impacted By Continued Global Uncertainties And Local Market Sentiments
Market Capitalisation (RM tn)
0.9
1.1
Daily Average Trading Volume
OMT+DBT (bn)
0.7
1.6
Daily Average Trading Value
OMT+DBT (RM bn)
1.4
2.4
38%
35%
33%
Daily Average Market Transacted Value – OMT (RM mn)
Daily Average Market Transacted Volume – OMT (mn units)
Turnover Velocity
(42)
1H06
DERIVATIVES
YTD
12 Sept 08
FY
2007
1,532
53
45%
1,912
34
61%
2,454
Velocity (%)
2500
2450
2400
2350
2300
%
2250
2200
2150
2100
2050
2000
1950
1900
1850
1800
1750
1700
(36)
1650
1600
1550
1500
1450
1400
1350
1300
1250
1200
1150
(18)
1100
1050
1000
950
900
850
800
750
700
650
600
550
500
450
(56)
400
350
300
250
200
150
100
50
0
1,026
EQUITIES
FY
2007
1,011
YTD
12 Sept 08
30,000
159,019
25,000
%
20,000
2H06
1H07
161,544
2H07
1H08
125,051
121,775
115,569
(2)5,000
0
25,421
25,011
23,495
24,635
26,576
Daily Average Contracts
20,572
10,000
13,136
15,000
Daily Average Contracts (units)
Open Position
4
Key Ratios
%
1H08
1H07
%
Annualised Return on Equity
18.4
31.7
(42)
25.1
(27)
EBITDA Margin
50.7
69.4
(30)
58.3
(13)
Net Profit Margin
37.8
50.7
(25)
46.8
(19)
Stable Revenue + Derivatives Income:
Total Operating Expenses
83.7
87.9
(5)
74.0
(13)
2H07
%
1H08 vs. 1H07 Commentary
The ratios are lower mainly due to the lower revenue from the equity market
5
Financial Results Overview
%
2H07
239.2
(31)
204.0
(20)
83.1
165.9
(50)
118.9
(30)
Operating Expenses (mn)
90.3
80.2
13
92.2
(2)
Profit Before Tax (mn)
96.3
186.0
(48)
133.0
(28)
Taxation (mn)
25.6
50.8
(50)
27.6
(7)
Profit After Tax (mn)
70.7
135.2
(48)
105.5
(33)
Earnings per Share (sen)
13.5
26.0
(48)
20.1
(33)
1H08
1H07
Operating Revenue (mn)
164.1
EBITDA (mn)
RM
%
Commentary
• Decrease of revenue affected by continuing global & domestic uncertainties and inflationary pressures
6
Operating Revenue
1H08: RM 164.1 mn (USD 50.2 mn)
2%
1H07: RM 239.2 mn (USD 69.2 mn)
2%
19%
52%
69%
33%
10%
13%
RM mn
%
2H07
%
1H08
1H07
Trading Revenue (Equities)
84.9
164.5
86.8
(48)
132.0
86.8
(36)
Trading Revenue (Derivatives)
22.0
23.7
12.9
(7)
21.0
12.9
5
Stable Revenue
53.5
46.8
23.0
14
47.2
23.0
13
Other Operating Revenue*
3.7
4.2
1.6
(12)
3.8
1.6
(3)
* Other Operating Revenue = perusal and processing fees
1H08 vs. 1H07 Commentary
•Equity market performed poorer due to the bearish market and revision of clearing fee
•Lower derivatives trading revenue due to decline in number of derivatives contracts from 3.2mn in 1H07 to 3.1mn in 1H08
•Stable revenue increased due to higher listing and information services fees
•Lower Other Operating Revenue due to lower perusal & processing fees
7
1H08: RM 53.5 mn (USD 16.4 mn)
Stable Revenue
1H07: RM 46.8 mn (USD 13.5 mn)
31%
26%
5%
2%
36%
13%
28%
23%
16%
20%
RM mn
Depository Services
1H08
13.9
1H07
14.6
86.8
%
(5)
2H07
13.8
86.8
1
Listing Fees
19.1
13.1
12.9
46
14.0
12.9
36
Information Services
12.2
9.5
23.0
28
10.3
23.0
18
Broker Services*
6.9
7.5
1.6
(8)
7.6
1.6
(9)
Participants’ Fees**
1.4
2.1
(33)
1.5
(7)
%
* Broker Services comprises of Data Comm equipment rental income from a fixed monthly rate
** Participants’ Fees comprises of application/admission/initial/registration fees, participants’ subscriptions and renewal fees
1H08 vs. 1H07 Commentary
•Higher listing fees due to full charge of listing fees in 2008 (50% rebate in 2007)
•Higher information services fees due to revised fee structure in October 2007
•Lower broker services fees from reduction in number of terminals at broker sites (Migration of old CDS system to web based system)
•Lower depository fees due to lower transfer fee and additional issue fees (reduced corporate activities)
•Lower participants’ fees due to the absence of MESDAQ advisors and sponsors applications in 1H08
8
Operating Expenses
1H08: RM 90.3 mn (USD 27.6 mn)
1H07: RM 80.2 mn (USD 23.2 mn)
16%
20%
9%
10%
5%
6%
`
52%
48%
9%
9%
8%
8%
RM mn
1H08
%
1H07
Staff Costs
43.1
Market Development
7.5
IT Maintenance
7.6
Building Management Costs
4.7
Depreciation & Amortisation
9.3
41.8
86.8
6.4
12.9
7.4
23.0
4.5
1.6
7.0
Other OPEX
18.1
13.1
3
2H07
%
33
(1)%
43.6
86.8
11.8 (36)
12.9
27
6.0
23.0
(2)
4.8
1.6
31
7.1
38
18.9
17
3
4
(4)
* Other OPEX = professional fees, administrative expenses, CDS consumables, etc.
1H08 vs. 1H07 Commentary
•Increase in staff costs due to higher ESOS allocations, increase in headcounts & annual salary increments
•Higher depreciation due to newly acquired system upgrade, renovation & FMTP launch
•Higher other OPEX is mainly due to higher professional fees paid and bond impairment resulting from a weak bond market
9
Capital Management
@ 30 June 2008
RM mn
USD $ mn
423
130
Shareholders’ Fund
760
233
Capital Expenditure
12
Financial Resources Available for Use *
4
* Inclusive of RM64mn interim dividend paid in August 2008
10
Dividend Payout > 90%
Delivers Value To Shareholders
Historical Dividend Payout in sen
91%
91%
81
92%
28
Interim Gross Dividend/Share
Final Gross Dividend/Share
28
14
10
10
12.5
FY05
FY06
25
91%
32
FY07
16.5
Special Dividend
Capital Repayment
% of dividend payout excluding
special dividend & capital repayment
1H08
Total Shareholders’ Return since listing till 12 Sept 2008
185%
11
Targets
Challenged By Global And Domestic Climate
Target
1H08
Velocity
56%
38%
Annual growth in derivatives
contracts traded
50%
0%
Bursa’s KPI 2008
i
Initiatives:
Improvement of Infrastructure
‰ DMA Derivatives
‰ Bursa Trade Securities
Introduction of New Products
‰ USD Crude Palm Oil Futures
Other Initiatives
‰ Continued Retail Education
12
In The Pipeline…
Initiatives To Enhance Market Attractiveness
Improvement of Infrastructure
‰ DMA Equity
‰ Commodity Murabahah House
‰ Asean trading linkages
‰ Multicurrency platform
‰ Islamic Securities Borrowing & Lending
‰ Negotiated Large Trades - Derivatives
Introduction of New Product
‰ Multicurrency ETFs
‰ Thematic ETFs
Other Initiative
‰ Commodity Futures Trading Commission’s Approval
‰ Unification of Boards
‰ Market Making
13
Outlook
EQUITIES MARKET
Challenging months ahead
‰ Investors’ sentiment expected to be impacted by slowing US and global
economy, rising crude oil, commodities & food prices and domestic uncertainties
‰ Good opportunity for bargain hunting
‰ A shift to Islamic based investment products
DERIVATIVES MARKET
Expect continued interest in FCPO and FKLI
‰ FKLI: Interest to move in tandem with the expectations in the equity market
‰ FCPO: Interest guided by expectations of supply and demand of CPO, price
of substitute products and environmental issues.
BOND MARKET
No significant income expected due to availability of alternative OTC trading
14
ADDITIONAL INFORMATION
15
Effective Clearing Fee Rate
Affected By Institutional Bunching Of Trades And Lower Retail Participation
39%
0.0291
Q107
35%
0.0283
Q207
40%
33%
25%
24%
0.0226
0.0231
0.0295
0.0272
Q307
Q407
Q108
Q208
% of retail trading participation by value
Note : Clearing Fee revised to 0.03% (capped at RM1,000) effective 1 Jan 08 from 0.04% (capped at RM500)
16
Our Market Remains Competitive
18 New Listings @ 12 September 2008
987
Market Valuation & Listed Companies
1027
1106
945
963
865
736
798
758
982
906
849
816
722
640
695
553
444
482
465
375
1998
1999
2000
2001
2002
2003
2004
Market Valuation
2005
2006
2007
YTD
12 Sept 08
Number of Companies
Market Valuation (RMb)
1021
Shariah
Compliant
Non- Shariah
Compliant
840 Shariah Compliant
Companies ; 85%
(Mkt Cap USD155 bn)
Source : ISBU
Total Listed Companies
1%
1%
1%
63
136
Main Board
Second Board
85% or 66%
in terms of
market cap
280
804
Mesdaq
Call Warrants
No. of Counters Listed
1,283
Main Board
Second Board
Mesdaq
Call Warrants
97%
97%
Market Capitalisation USD229 bn (RM791 bn)
17
Bursa’s Sustainable Velocity Target : 60% By 2010
Turnover Velocity For The Past 12 Months To August 2008
Philliphine SE
Bursa Malaysia
New Zealand Exchange
Singapore Exchanges
The Stock Exchange of Thailand
Indonesia SE
National Stock Exchange India
Hong Kong Exchanges
Australian SE
Shanghai SE
Euronext
Tokyo SE
24%
40%
40%
47%
65%
68%
69%
74%
89%
112%
116%
132%
141%
London SE
149%
Taiw an SE Corp.
150%
Korea Exchange
NYSE
174%
206%
236%
Shenzen SE
Source: World Federation Exchanges (WFE)
18
Diversity Provides Resilience
As at 29 August 2008
Number of Listed Companies
2%
Market Capitalisation of KLCI Components
5%
5%
13%
21%
4%
6%
42%
25%
10%
9%
31%
8%
2%
4% 1%
9%
3%
Construction
Consumer
Finance
Industrial
Infrastructure
Plantation
Property
Technology
Trading/Services
Others
19
Velocity
2500
70%
2,179
2450
58%
2400
57% 57%
2350
2300
2250
2200
53%
2150
60%
2100
2057
2050
2000
1924
1950
1900
1850
1,438 50%
1800
40%
1750
1700
39%
1650
34%
1600
1372
1550
34%
1500
34%
1450
40%
1400
32%
31%
33%
1350
1300
1250
25%
1200
1150
911
1100
1019
23%
30%
1050
805
20%
1000
797
748
950
874
900
850
800
750
718
20%
497
700
472
650
600
350
550
500
450
400
350
10%
300
250
200
150
100
500
0%
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007 12 Sept 08
Daily Average Market Transacted Volume (million units)
Daily Average Market Transacted Value (million RM)
Turnover Velocity
20
Quarterly Velocity
2610
2620
2570
2520
2470
2420
2370
2320
2270
2220
2170
2120
2070
2020
1970
1920
1870
1820
1770
1720
1670
1620
1570
1520
1470
1420
1370
1320
1270
1220
1170
30%
1120
910
1070
1020
970
920
870
820
770
720
670
620
570
520
470
420
370
320
270
220
170
120
70
20
-30
Q106
80%
68%
2303
1907
54%
50%
1283
38%
39%
1107
70%
2069
60%
1751
41%
46%
782
50%
1186
27%
40%
31% 909 30%
24%
20%
10%
Q206
Q306
Q406
Q107
Q207
Q307
Q407
Q108
July Q208
12 Sept 08
0%
Daily Average Market Transacted Volume (million units)
Daily Average Market Transacted Value (million RM)
Turnover Velocity
21
Offers The Highest Dividend Yield
Selected Regional Markets - Dividend Yield
Malaysia (KLCI)
5.08%
Taiwan (TWSE)
5.02%
Thailand (SET)
4.65%
4.62%
Australia (AS30)
4.58%
Philippines (PCOMP)
Singapore (FSSTI)
4.10%
Hong Kong (HSI)
2.93%
2.00%
South Korea (Kospi)
1.92%
Indonesia (JCI)
China (SHASHR)
1.54%
Source: Bloomberg – Dividend yield for main regional indices as at 29th August 2008
22
Attractive Market P/E Valuation
13.8
13.9 13.8
13.4
12.8
12.5 12.6
11.7
12.3
11.6 11.7
10.0
Hong Kong
Indonesia
Singapore
Philippines
P/E
Taiwan
Malaysia
10.9 10.8
South Korea
10.2 9.8
Thailand
Forward P/E
Source: Bloomberg - P/E Valuation for main regional indices as at 29th August 2008
23
Local Investors
YT
D
Foreign Investors
06
05
04
03
02
01
00
99
98
97
96
95
94
93
07
A
ug
us
t0
8
20
20
20
20
20
20
20
20
19
19
19
19
19
19
19
37%
42%
58%
35%
37%
31%
24%
32%
29%
22%
17%
27%
24%
19%
31%
18%
15%
63%
65%
63%
69%
76%
68%
71%
78%
83%
73%
76%
81%
69%
82%
85%
Sustained Foreign Trading Reflects Market Resilience
Breakdown of trading (by value) 1993 to August 2008
24
Retail Participation
Drop In Retail Volume Due To Weak Investors’ Sentiment
Retail
Institutions
Others
77%
23%
YT
D
A
20
07
ug
us
t0
8
37%
66%
20
06
20
05
29%
34%
71%
53%
20
04
43%
50%
20
03
63%
3%
5%
45%
6%
40%
20
02
51%
43%
20
01
54%
6%
6%
40%
54%
20
00
19
98
19
99
49%
59%
43%
35%
6%
8%
14%
42%
44%
19
97
19
96
19
95
44%
54%
45%
36%
10%
11%
7%
48%
45%
19
94
19
93
42%
51%
7%
Breakdown of trading (by value) 1993 to August 2008
“Others”- refers to trades conducted for accounts not belonging to individuals/ institutions. Definitions of investors’ type clarified in 2004, hence
reducing the type of investor falling under “others” category.
25
Foreign Ownership At 23.6%
Malaysian and Foreign Shareholdings as at 31 August 2008
August 2008
Items
Total Shareholdings (Units-Bn)
%
Total Market Value (RM-Bn)
%
Direct Holdings
17.0
4.11
39.3
4.72
Foreign Nominees*
55.9
13.32
157.4
18.91
2 Malaysians
341.0
82.57
635.5
76.37
3 Total securities immobilised in CDS
413.0
100.00
832.2
100.00
1 Foreigners
Note : Foreign Nominees reflect shares owned by foreigners but held via Authorised Nominee Companies incorporated in Malaysia.
28.0%
Foreign Ownership from Jan 07 – July 08
Foreign Shareholdings by Nationality for
Selected Countries as at 31 August 2008
27.5%
27.0%
United
Kingdom
1.25%
26.5%
24.6%
24.0%
25.7%
25.0%
24.5%
Singapore
8.05%
26.5%
25.0%
26.6%
25.5%
26.9%
27.5%
26.0%
23.5%
Hong Kong
1.39%
United States of
Americas
0.42%
Mid-East
0.14%
Others
12. 36%
Foreign Nominees
76.39%
8
Ju
l -0
r-0
8
Ap
08
Ja
n-
-0
7
O
ct
7
Ju
l -0
r-0
7
Ap
Ja
n-
07
23.0%
26
Quarterly Derivatives Activity
35,000
162,638
180,000
159,019 158,737 161,544
138,648
145,107
30,000
131,795
125,051
25,000
160,000
115,569
120,000
20,000 96,002
22,841
80,000
20,946
30,283
22,151
24,797
27,099
22,113
19,104
14,500
11,703
5,000
26,035
100,000
15,000
10,000
140,000
121,775
60,000
40,000
20,000
0
0
Q106
Q206
Q306
Q406
Q107
Q207
Q307
Daily Average Derivatives Contracts
Q407
Q108
Q208
July 12 Sept 08
Open Position
27
2 Leading Derivatives Products, FKLI & FCPO
4%
4%
46%
50%
Total contracts traded 1H 2007 = 3.2 mn
46%
50%
Total contracts traded 1H 2008 = 3.1 mn
-5%
Crude Palm Oil Futures (FCPO)
KL Composite Index Futures (FKLI)
3-Month Kuala Lumpur Interbank Offered Rate Futures (FKB3)
28
Derivatives Market Demography
FKLI
KLCI Futures
14%
3%
23%
31%
37%
40%
3%
3%
45%
43%
19%
14%
2002
2003
5%
45%
48%
31%
2001
45%
42%
41%
2%
2%
1%
40%
40%
41%
42%
16%
16%
13%
15%
16%
2004
2005
2006
2007
YTD Aug 08
6%
Locals
Domestic Retail
Domestic Institutions
Foreign Institutions
* Local - A local participant is an individual who has been admitted as a participant in accordance with The Rules, registered
with SC and has the right to trade for himself - all futures contracts listed on the Derivatives Exchange.
29
Derivatives Market Demography
FCPO
Crude Palm Oil Futures
14%
14%
17%
27%
21%
18%
15%
21%
26%
40%
2001
38%
2002
Locals
20%
18%
16%
18%
21%
20%
22%
25%
22%
14%
24%
23%
27%
34%
35%
33%
35%
31%
25%
27%
2003
2004
2005
2006
2007
YTD Aug 08
Domestic Retail
Domestic Institutions
37%
Foreign Institutions
* Local - A local participant is an individual who has been admitted as a participant in accordance with The Rules, registered
with SC and has the right to trade for himself - all futures contracts listed on the Derivatives Exchange.
30
Bursa’s Strong Niche In Islamic Capital Market
Brand
Expertise
Infrastructure
• Leading centre in Islamic banking
– 11 standalone Islamic Banks (3 are foreign)
• Pioneer in Islamic finance
• Islamic friendly
– Highly regarded by Islamic investors, with Middle Eastern liquidity favoring Malaysia
over other developed markets
• Islamic finance experts within Bursa Malaysia
• Access to Shariah Advisory Council (SAC)
– Close collaboration with SC on Islamic Capital Market transaction and activities
• Islamic Financial Services Board (IFSB), international standard-setting organisation for
the Islamic financial services industry
• International Centre for Education in Islamic Finance established to develop the global
Islamic finance industry’s human capital
• Involvement of leading Islamic finance academics and industry experts as advisors to
capital markets players
• Most established Shariah-compliant legal and regulatory framework
• Tax exemptions for Islamic intermediaries
– Asset managers, banking products and Takaful companies
• LFX as an offshore platform with significant Islamic finance activity
– Significant Sukuk activity
– Potential offshore listing destination for Islamic finance products, with access to a
broad pool of investors
31
Global Network
Hong Kong Exchanges
& Clearing
Sharing market
surveillance information
Dalian Commodities Exchange
Joint organizing of “China
International Oil and Oilseeds
Conference”.
Dubai Gold &
Commodities Exchange
Development of
derivatives markets
NYSE Euronext
Technology Solutions Provider for
equities, derivatives & DMA platform:
Through NYX Advanced Trading
Solutions
PT. Bursa Berjangka Jakarta
Development of futures and
commodities markets
Ho Chi Minh City & Hanoi
Securities Trading Centre
Facilitating communication
channels and fostering relations
Korea Exchange
Development of Financial Market
Trading Platform for the bond
market in Bursa Malaysia
Singapore Exchange
Derivatives Trading
Limited
Exploring future business
relationship opportunities
Australian Securities
Exchange
Facilitating communication
channels and fostering relations
The Agricultural Futures Exchange
of Thailand
Development of commodities and
futures markets
Multi Commodity Exchange of India
Tokyo Stock Exchange
Providing mutual cooperation on
Limited
Development of commodities market and
personnel training & information
for cross listing of products
exchange
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Liberalisation Efforts – No Capital Control
Re-introduction of regulated short
selling (RSS) and stock borrowing
& lending (SBL)
Admission of 5 foreign brokers
(UBS, CLSA, CSFB, Macquarie,
JP Morgan)
Admission of 5 foreign fund
managers (Aberdeen, Nomura,
BNP Paribas, Credit Agricole,
Franklin Templeton Investments)
No Capital Gains Tax
No Property Gains Tax
Accelerate tax restructuring
: Reits (10% local & foreign)
: Corporate tax (25% - 2009,
26% - 2008)
Liberalisation of Foreign Listing &
Dual Listing
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Sound Macro Environment
REAL GROWTH
Projected +- 4.5-5%
CONDUCIVE DOMESTIC INTEREST RATES
Overnight policy rate: 3.5%
HIGHER INFLATION Now at 7-8%
Annual CPI forecasted: 5%
STRENGTHENING RINGGIT
Appreciation of up to 15.8% since 2005
NINTH MALAYSIAN PLAN UNDERWAY
New emphasis on key economic developments
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