PhillipCapital has reduced its FY2022 earnings forecast by 19.4% to incorporate the Singapore Exchange’s (SGX) higher expenses guidance of between $565 million to $575 million.
This comes after SGX posted a weak set of FY2021 results ended June 30.
See also: Should investors take up SGX’s scrip dividend?
PhillipCapital says the guidance is an 8.6% increase from FY2021 at the mid-point.
More than 50% of the increase will be for near-term investments, which include the setting up of a foreign exchange electronic communication network, climate-related initiatives and continued investments in BidFX and Scientific Beta.
“We raise FY2022 operational expenditure by 29.8% to the mid-point of guidance,” PhillipCapital's senior analyst Terence Chua writes in an Aug 12 report.
PhillipCapital has maintained its “neutral” call for the stock with a lower target price of $11.54 from $11.95 previously.
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As at 2.23 pm, SGX was up 1 cent or 0.1% at $10.28 with 1.1 million shares changed hands. The counter is trading at 9.4 times P/BV with an FY2021 dividend yield of 2.9%, according to PhillipCapital's estimates.
