Singapore Exchange (SGX) delivered FY13 net earnings of S$335.9m, exactly in line with market expectations. Securities Market saw Securities Daily Average Value (SDAV) of S$1.5b in FY13, up 10%, resulting in a 10% increase in turnover to S$363b. Derivatives Market enjoyed strong volume too, with 101m contracts traded, up 32% in FY13. Management has declared a FY13 full year dividend of 28 cents, up 1 cent from 27 cents (from FY2010-2012). This meant a final quarter payout of 16 cents (12 cents have already been paid out). Recent macro factors are pointing to uncertainty ahead, and this is likely to result in a quieter 1QFY14. In addition, this could potentially spillover into 2Q. Expenses are likely to stay high in FY14, largely from new product initiatives as well as its regulatory requirement related expenses. As we roll our estimates into FY14/15 and using the same blended 23x earnings, we are raising our fair value estimate slightly from S$7.16 to S$7.43. Dividend yield is 3.7% based on current price. Maintain HOLD.
Earnings exactly in line with street estimates
Singapore Exchange (SGX) reported FY13 net earnings of S$335.9m, almost spot on with consensus estimate of S$335.5m (based on Bloomberg poll). This gives 4QFY13 net earnings of S$85.6m, up 43% YoY and down 10.3% QoQ. Securities Market saw Securities Daily Average Value (SDAV) of S$1.5b in FY13, up 10%, resulting in a 10% increase in turnover to S$363b. Derivatives Market enjoyed strong volume too, with 101m contracts traded, up 32% in FY13. Capital raising activities were also strong, with fund raised increasing 120% to S$13.5b. Capital expenditure of S$32m in FY13 was within management’s guidance, and management is guiding for S$35-40m for FY14. FY13 full-year dividend of 28 cents was declared, up 1 cent (from 27 cents for FY2010-2012). This meant a final quarter payout of 16 cents (12 cents have already been paid out).
1QFY14 unlikely to excite
Recent macro factors are pointing to uncertainty ahead and this has tempered market trading activities. As an indication, early numbers in Jul are already showing lower traded value for the Securities Market, not only on a MoM basis but also the lowest so far this year (CY2013). This point to a quieter 1QFY14, especially in view of increasing market concern that the US Fed tapering of QE is likely to start in Sep 2013 and this is likely to dampen the outlook for equities.
No near term price drivers; maintain HOLD
FY13 was a good year for capital raising and SGX’s issuer services. While capital raising exercises are likely to remain healthy for FY14, we remain concerned about the potential decline in trading activities in 1QFY14, and possibly spilling over into 2Q. Expenses are likely to stay high in FY14, largely from new product initiatives as well as its regulatory requirement related expenses. Earlier imputed re-location expenses will also be reflected in its FY14 accounts. As we roll our estimates into FY14/15 and using the same blended 23x earnings, we are raising our fair value estimate slightly from S$7.16 to S$7.43. Dividend yield is 3.7% based on current price. Maintain HOLD
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Singapore Exchange (SGX) reported FY13 net earnings of S$335.9m, almost spot on with consensus estimate of S$335.5m (based on Bloomberg poll). This gives 4QFY13 net earnings of S$85.6m, up 43% YoY and down 10.3% QoQ. Securities Market saw Securities Daily Average Value (SDAV) of S$1.5b in FY13, up 10%, resulting in a 10% increase in turnover to S$363b. Derivatives Market enjoyed strong volume too, with 101m contracts traded, up 32% in FY13. Capital raising activities were also strong, with fund raised increasing 120% to S$13.5b. Capital expenditure of S$32m in FY13 was within management’s guidance, and management is guiding for S$35-40m for FY14. FY13 full-year dividend of 28 cents was declared, up 1 cent (from 27 cents for FY2010-2012). This meant a final quarter payout of 16 cents (12 cents have already been paid out).
1QFY14 unlikely to excite
Recent macro factors are pointing to uncertainty ahead and this has tempered market trading activities. As an indication, early numbers in Jul are already showing lower traded value for the Securities Market, not only on a MoM basis but also the lowest so far this year (CY2013). This point to a quieter 1QFY14, especially in view of increasing market concern that the US Fed tapering of QE is likely to start in Sep 2013 and this is likely to dampen the outlook for equities.
No near term price drivers; maintain HOLD
FY13 was a good year for capital raising and SGX’s issuer services. While capital raising exercises are likely to remain healthy for FY14, we remain concerned about the potential decline in trading activities in 1QFY14, and possibly spilling over into 2Q. Expenses are likely to stay high in FY14, largely from new product initiatives as well as its regulatory requirement related expenses. Earlier imputed re-location expenses will also be reflected in its FY14 accounts. As we roll our estimates into FY14/15 and using the same blended 23x earnings, we are raising our fair value estimate slightly from S$7.16 to S$7.43. Dividend yield is 3.7% based on current price. Maintain HOLD
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