BURSA – Fundamental Analysis (24 Apr 2015)

BURSA Analysis:-

Excel – http://1drv.ms/1I1WI64

Notes – http://tinyurl.com/kgowyj6

My View:-

  • Valuation:
    • 10Y-DCF:
      • Good Scenario: 11.4 (Fair value uncertainty: LOW)
      • Base Scenario: 9.28 (Fair value uncertainty: HIGH)
      • Bad Scenario: 7.56 (Fair value uncertainty: VERY HIGH)
      • Ugly Scenario: 6.18 (Fair value uncertainty: EXTREME)
      • At current price (8.98), based on RDCF, assumption of FCFF growth rate in the next 10 years is 5.6%.
    • Absolute EY%:
      • Trailing:
        • FY14 (EPS: 0.372) – Fair value 10.42 (Fair Value Uncertainty: MEDIUM)
        • R4Q (EPS: 0.373) – Fair value 10.47 (Fair Value Uncertainty: MEDIUM)
      • Forward:
        • FY15 (EPS: 0.38) – Fair value 10.65 (Fair Value Uncertainty: MEDIUM)
        • FY16 (EPS: 0.417) – Fair value 11.68 (Fair Value Uncertainty: LOW)
      • EPS applied to reach the current stock price (8.98): 0.32
  • In 2015, retail investors/traders likely to stay on the sideline and become more vigilant with their trading habits given the current choppy market environment.
    • Behavioral finance studies have also shown that investors tend to be more loss averse rather than risk averse, leading to this to effect.
  • Foreigners have been net sellers of Malaysian stocks for the past 6 months and are unlikely to return anytime soon.
  • The increased interest by retail investors, in particular, is a positive sign. Local institutions remain a steady presence in the market, buffering stocks from the worst of the effects of selling by foreign investors.
  • I remain sanguine on the company’s outlook over the longer term. Its business model is also fairly resilient. As mentioned above, recurring and other incomes, including interest income, is sufficient to cover some 91% of total operating expenses.
  • I will continue to hold and accumulate BURSA.
  • There are different views on whether BURSA will give special dividends. For me, BURSA so far has been quite generous in giving dividends. Special dividends will be a good bonus, but no big deal if no special dividends.

Latest Financial – Q1 2015 Financial Report (22 Apr 2015) http://www.bursamalaysia.com/market/listed-companies/company-announcements/4713105

At the time of writing, I owned shares of BURSA.

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2 thoughts on “BURSA – Fundamental Analysis (24 Apr 2015)

  1. Does the current depreciation in RM have an effect on Bursa’s earnings in the future since investors may consider investing in other countries?

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    • Excessive Outflow money will definitely impact it’s earnings. As for private investors investing in other countries , I think it won’t impact Bursa’s earnings

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