SGX

CIMB on 17 Jan 2012


CIMB in a Jan 17 research report says: "SGX’s core net profit fell 19.9% y-o-y, and 14.3% q-o-q in a lacklustre quarter.  2Q12 core net profit ($65.4 million) is within our $62.9 million expectation and the street’s $61.4 million estimate. Revenues fell 14% y-o-y and 17% sequentially.


"Operating costs ($68.9 million) declined (-3.9% y-o-y, -7.6% q-o-q) after SGX scaled down staff and technological costs. SGX continued to introduce new ADR listings and derivatives products in the quarter. Efforts to increase retail participation are also underway, as are overall attempts to cut its reliance on securities clearing.


"We adjust our FY2012-2014 forecasts on cost assumption changes. We raise our DDM disc rate from 9.5% to 9.7% to account for valuation-compression risks, lowering our target price to $5.43. UNDERPERFORM."