SINGAPORE (Jan 22): OCBC Investment Research is continues to rate SGX “hold” with a fair value estimate of $8.16.
This came on the back of the group announcing on Friday that its 2Q18 results remained flat at $88.4 million, compared to $88.3 million a year ago. But this was down marginally q-o-q.
The total revenue for the second quarter ended December came in at $205 million, 3% higher than 199.6 million a year ago.
This was supported by an 11% rise in revenue from its derivatives segment to $83.3 million and 4% increase in its market data and connectivity segment to $24.2 million.
However, this was offset by a 4% decline in revenue from its equities and fixed income segment, which accounted for 48% of its total revenue.
Expenses also increased by 5% to $102.1 million in 2Q18, from $97.2 million a year ago, mainly due to higher staff costs and technology expenses, partially offset by lower discretionary expenses.
The group’s management is guiding for FY18 operating expenses of $410 million to $420 million, compared to the earlier guidance of $425 million to $435 million and for technology capital expenditure of $60 million to $65 million.
The group declared an interim dividend of 5 cents per share, which will be paid out on Feb 5.
See: SGX posts flat 2Q earnings of $88 mil as higher costs offset revenue rise
On Jan 19, the group announced that it will be going ahead with plans to allow companies to adopt a dual-class share (DCS) structure to list in Singapore.
See: Singapore Exchange to implement dual-class share structure
It also plans to launch Indian single stock futures.
In a Monday report, analyst Carmen Lee says, “In terms of pipeline and mandates, indication is that this is healthy and likely to be better than 2017. This is in addition to what was already previously launched including Daily Leverage Certificates.”
In addition, the exchange is working on its collaboration and connectivity and this included its previously announced presence in Chicago.
The stock has gained 5.4% in the past trading sessions, closing at %7.98 on Friday.
The analyst says that this was partially supported by gains in regional equity markets as well as a good start to 2018 with improved trading activities.
As at 12.26pm, shares in SGX are trading 26 cents higher at $8.24 or 21.9 times FY18 earnings with a dividend yield of 3.8%.
