Singapore Exchange (SGX Group) has reported adjusted net profit of $251.4 million, up 6.2% y-o-y for 1HFY2024 ended December.
Adjusted ebitda rose to S$344.6 million, up 3.2% y-o-y, while adjusted earnings per share increased to 23.5 cents from 22.2 cents this time last year.
Revenue increased 3.6% y-o-y to $592.2 million, mainly driven by higher revenues from currencies, commodities, platform and others segments; and was partially offset by lower equities revenue.
In a Feb 1 statement, SGX says the adjusted figures exclude certain non-cash and non-recurring items that have “less bearing” on its operating performance. “Hence, they better reflect the group’s underlying performance.”
Prior to the adjustment, net profit attributable to shareholders of $281.6 million was 1.0% lower y-o-y. Unadjusted earnings per share would have been higher at 26.3 cents.
On costs, total expenses increased 3.0% y-o-y to $296.1 million, mainly from higher staff costs and technology costs, offset by lower royalties and professional fees. Adjusted total expenses increased 3.5% y-o-y to $289.7 million, which excludes amortisation of purchased intangible assets.
Total capital expenditure was $18.5 million, down from $17.8 million this time last year. “These investments include upgrades to our Titan OTC trade reporting system, modernisation of our technology infrastructure and consolidation of our office spaces,” says SGX.
The Board of Directors has declared an interim quarterly dividend of 8.5 cents per share, payable on Feb 20. This brings total dividends in 1HFY2024 to 17.0 cents per share.
SGX raised its quarterly dividend at the release of its results for FY2023 ended June 2023, ending 12 consecutive quarters of 8-cent payouts.
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SGX says it is cautious on the near-term outlook as prospects for global growth appear muted.
“Rising geopolitical tensions and divergence in economic performance are likely to add to the headwinds and uncertainties that we are facing. As such, we will remain prudent in managing our expenses and capital expenditure,” adds the bourse.
Looking ahead, expense growth in FY2024 is likely to be similar to the 3% y-o-y expense growth rate observed in 1HFY2024, lower than the previously guided mid-single-digit percentage range, says SGX.
“Our projected capital expenditure for FY2024 [ended June] is anticipated to be within $70-75 million, lower than our previously guided $75-80 million range.”
New classification
SGX has adopted four new operating segments: fixed income, currencies and commodities (FICC); cash equities; equity derivatives; and platform and others.
Up until its previous set of results — for the FY2023 period — SGX had classified revenue under three segments: FICC; equities; and data, connectivity and indices.
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SGX has reclassified its revenue for 1HFY2023 ended December 2022 to the four new segments for a like-for-like comparison.
FICC
FICC revenue increased 28.1% y-o-y to $151.9 million and accounted for 25.6% of total revenue, up from 20.7%.
There were 489 bond listings raising $131.7 billion during the period, up from 449 bond listings that raised $104.3 billion a year earlier.
Currencies and commodities revenue increased 29.5% y-o-y to $148.0 million. OTC FX revenue was $40.9 million, up from $36.2 million; and accounted for 27.7% currencies and commodities revenue, down from 31.7%.
Cash equities
Cash equities revenue declined 5.6% y-o-y to $159.6 million and accounted for 26.9% of total revenue, down from 29.6%.
During the period, SGX recorded four new equity listings, which raised $19.0 million. This is unchanged from the four new listings seen in 1HFY2023, but up from the $9.7 million raised this time last year. Secondary equity funds raised were $0.6 billion, down from $2.4 billion.
Daily average traded value (DAV) and total traded value declined 11.5% and 12.2% to $1.0 billion and $121.2 billion respectively.
This was made up of cash equities, where total traded value decreased by 11.9% to $116.0 billion, and other products, where traded value decreased 19.5% to $5.2 billion.
These other products include structured warrants, exchange-traded funds, daily leverage certificates, debt securities and American depository receipts.
Equity derivatives
Equity derivatives revenue declined 6.9% to $160.7 million and accounted for 27.1% of total revenue, down from 30.2%.
The decline in trading and clearing revenue was due to a 14.0% decline in total equity derivatives volumes, mainly from declines in volumes of GIFT Nifty and FTSE China A50 index futures contracts. Excluding Nifty, trading and clearing revenue decreased 5.1%, says SGX.
Average fee per contract for equity, currency and commodity derivatives was lower at $1.54, down from $1.58, mainly driven by a decline in the average fee of Nifty 50 index futures, due to reclass of NSE fee arrangement from expense to revenue as part of GIFT Connect.
On a pro forma basis, 1HFY2024 average fee per contract remained comparable at $1.54 from $1.53 a year ago.
Platform and others
Finally, platform and others revenue increased 8.0% to $120.1 million and accounted for 20.3% of total revenue, up from 19.5%.
Market data revenue was up 9.9% to $24.2 million; connectivity revenue was up 8.7% to $38.5 million; and indices and other revenue was up 6.8% to $57.4 million.
Loh Boon Chye, chief executive officer of SGX Group, says: “Our multi-asset offering continued to serve our customers well in a persistently challenging macro environment. Our currency and commodity derivatives business has been a growing contributor to revenue, and our OTC FX franchise is making good progress with average daily volume consistently reaching US$100 billion in recent months.”
Loh adds: “The year ahead could see muted global economic growth and geopolitical concerns that may affect market sentiment and risk appetite. Nonetheless, the resilience of our multi-asset strategy as well as healthy financial position and discipline will enable us to capitalise on conditions across cycles. To drive growth, we will focus on expanding our solutions to capture opportunities in Asia, grow our emerging products and further strengthen our global distribution and network.”
Shares in SGX closed 3 cents lower, or 0.32% down, at $9.41 on Jan 31.
