UOB KayHian has become the latest brokerage to track the Singapore Exchange, rating the bourse operator a “buy” with target price of $12.35.
UOB KH says SGX’s multi-asset platform ensures that it has a resilient revenue stream from several sources.
SEE:Continue to 'buy' SGX as trading momentum should sustain through FY21: RHB
This includes a wide range of liquid futures and options products in key asset classes, such as equities, currencies and commodities.
Its traditional stock exchange business could also see a lift from the potential secondary listing of Grab and Sea.
The brokerage believes that SGX’s daily average volume could improve by 6% to 40%, assuming there is no leakage in trading volume from other large caps.
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UOB KH has forecast the company’s revenue and earnings to grow at a compounded annual rate of 3.9% for FY2019-FY2023.
“We opine that any new initiatives – [such as special purpose acquisition companies and secondary listings] – could potentially rerate SGX to trade closer towards its developed markets counterparts of similar size,” UOB KH analyst Lucas Teng writes in a note dated April 27.
As at 12.31 pm, SGX was down 1 cent or 0.1% at $10.57 with 899,100 shares changed hands.
