Summary: Singapore Exchange (SGX) delivered 1QFY13 net earnings of S$74.3m which were fairly in line with market expectation. Securities Revenue accounted for 36% while Derivatives Revenue made up another 28% of group revenue. Base dividend payout per quarter of 4 cents will be paid on 5 Nov 2012. SGX continues to work on several new initiatives, but these are fairly long term in nature and we expect minimal financial impact for FY13. We are keeping our FY13 estimates despite it being below market as we see continued softness in the global market, and this will also limit share price upside for the near term. We are maintaining our fair value estimate of $6.80 and HOLD rating.
1Q13 earnings of S$74.3m was in line with expectations
Singapore Exchange (SGX) kicked off its FY13 financial year with 1Q net earnings of S$74.3m, slightly below consensus estimate of S$75.6m, according to information from Bloomberg. This is a decrease of 15.1% YoY but +21.7% QoQ. Revenue fell 10% YoY (+2% QoQ) to S$160.5m, which was slightly below consensus estimate of S$165.3m. Securities Revenue accounted for 36% of total revenue versus 40% last year. Derivatives Revenue amounted to 28% (24% a year ago) of group revenue. A 1Q dividend of 4 cents has been declared and is payable on 5 Nov 2012. Management has guided that expenses for FY13 are expected to be between S$295m and S$305m. Capital expenditure is expected to be around S$30m to S$35m for the year.
Some significant developments
The ASEAN Link was finally launched on 18 Sep 2012, kicking off with Bursa Malaysia. This was followed by Thailand on 15 Oct 2012. The three markets offer some 3,000 listed companies with a market capitalisation of USD1.4 trillion. ASEAN Exchanges is a collaboration of the seven stock exchanges of ASEAN. The IPO pipeline looks fairly healthy and 10 IPOs came into the market in 1Q and several are still pending.
Still a HOLD; we see limited near term price drivers
Based on current consensus net earnings estimate of S$320.8m from Bloomberg, our current estimate of S$307.6m is below market average. However, we are retaining it for now as we still see challenges in the months ahead and this will continue to rein in optimism with the resultant impact of fairly muted to minimal growth in trading activities. While M&A activities came into focus in 1QFY13, especially for selected sectors, we expect interest to taper off as valuations move higher. We are maintaining our fair value estimate of S$6.80 (current dividend yield of 3.9%) and our HOLD rating.
Singapore Exchange (SGX) kicked off its FY13 financial year with 1Q net earnings of S$74.3m, slightly below consensus estimate of S$75.6m, according to information from Bloomberg. This is a decrease of 15.1% YoY but +21.7% QoQ. Revenue fell 10% YoY (+2% QoQ) to S$160.5m, which was slightly below consensus estimate of S$165.3m. Securities Revenue accounted for 36% of total revenue versus 40% last year. Derivatives Revenue amounted to 28% (24% a year ago) of group revenue. A 1Q dividend of 4 cents has been declared and is payable on 5 Nov 2012. Management has guided that expenses for FY13 are expected to be between S$295m and S$305m. Capital expenditure is expected to be around S$30m to S$35m for the year.
Some significant developments
The ASEAN Link was finally launched on 18 Sep 2012, kicking off with Bursa Malaysia. This was followed by Thailand on 15 Oct 2012. The three markets offer some 3,000 listed companies with a market capitalisation of USD1.4 trillion. ASEAN Exchanges is a collaboration of the seven stock exchanges of ASEAN. The IPO pipeline looks fairly healthy and 10 IPOs came into the market in 1Q and several are still pending.
Still a HOLD; we see limited near term price drivers
Based on current consensus net earnings estimate of S$320.8m from Bloomberg, our current estimate of S$307.6m is below market average. However, we are retaining it for now as we still see challenges in the months ahead and this will continue to rein in optimism with the resultant impact of fairly muted to minimal growth in trading activities. While M&A activities came into focus in 1QFY13, especially for selected sectors, we expect interest to taper off as valuations move higher. We are maintaining our fair value estimate of S$6.80 (current dividend yield of 3.9%) and our HOLD rating.
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