Singapore Exchange (SGX) posted above market expectations 1QFY13 net earnings of S$92.3m last week, up 24.2% YoY. The improvement was across the board from Securities to Depository Services. Securities and Derivatives revenues accounted for 66% of total revenue. An unchanged interim base dividend of 4 cents has been declared. Management is guiding for operating expenses of S$320-330m and capital expenditure of S$35-40m in FY14. We believe that our projections, while on the lower-end of market range, are still on track as 1Q already accounted for 26% of our full year estimate. With global uncertainty still remaining, there are fewer price drivers ahead until we get better clarity from the developed markets. We are retaining our earnings projection, fair value of S$7.43 and HOLD rating.
1QFY14 earnings were above expectations
Singapore Exchange (SGX) posted 1QFY13 net earnings of S$92.3m last week, up 24.2% YoY. Despite a generally weaker equity market, its 1Q performance was above market expectations of S$84.3m. Securities Revenue grew 17% YoY or down 11% QoQ to S$69.0m. Derivatives rose 16% YoY or down 12% QoQ to S$51.7m. Both accounted for 66% of its total revenue. A total of 11 listings took place in the quarter and raised S$2.0b versus 10 listings a year ago (S$3.6b). New bond listings amounted to S$38.8b versus S$52.5b a year ago. An interim base dividend of 4 cents has been declared. Book closure is on 25 Oct and the dividend payable date is 1 Nov 2013.
Across the board improvements
Management attributed the better 1QFY14 Securities Revenue to better average clearing fees. This rose from 2.9bp in 3QFY12 and 3.0bp in 4QFY13 to 3.2bp in 1QFY14. Growth for its Derivatives business was due to growth in key contracts as well as improving average month-end open interest, which was up 80% from a year ago. The latter grew from 1.9m contracts in 1QFY13 to 3.5m contracts in 1QFY14. Its overall performance was also aided by higher Depository Services revenue (+21% YoY) and Issuer Services revenue (+15% YoY).
Maintaining our forecasts and HOLD rating
Management has guided for operating expenses of S$320-330m for FY14. It expects technology-related capital expenditure to amount to S$35-40m in FY14. As we do not expect the stronger-than-expected 1Q performance to be repeated in 2Q, we believe our projections, while on the lower-end of market range, are still on track as 1Q already accounted for 26% of our full year estimate. With global uncertainty still remaining, there are fewer price drivers ahead until we get better clarity from the developed markets. We are retaining our earnings projection, fair value of S$7.43 and HOLD rating.
Singapore Exchange (SGX) posted 1QFY13 net earnings of S$92.3m last week, up 24.2% YoY. Despite a generally weaker equity market, its 1Q performance was above market expectations of S$84.3m. Securities Revenue grew 17% YoY or down 11% QoQ to S$69.0m. Derivatives rose 16% YoY or down 12% QoQ to S$51.7m. Both accounted for 66% of its total revenue. A total of 11 listings took place in the quarter and raised S$2.0b versus 10 listings a year ago (S$3.6b). New bond listings amounted to S$38.8b versus S$52.5b a year ago. An interim base dividend of 4 cents has been declared. Book closure is on 25 Oct and the dividend payable date is 1 Nov 2013.
Across the board improvements
Management attributed the better 1QFY14 Securities Revenue to better average clearing fees. This rose from 2.9bp in 3QFY12 and 3.0bp in 4QFY13 to 3.2bp in 1QFY14. Growth for its Derivatives business was due to growth in key contracts as well as improving average month-end open interest, which was up 80% from a year ago. The latter grew from 1.9m contracts in 1QFY13 to 3.5m contracts in 1QFY14. Its overall performance was also aided by higher Depository Services revenue (+21% YoY) and Issuer Services revenue (+15% YoY).
Maintaining our forecasts and HOLD rating
Management has guided for operating expenses of S$320-330m for FY14. It expects technology-related capital expenditure to amount to S$35-40m in FY14. As we do not expect the stronger-than-expected 1Q performance to be repeated in 2Q, we believe our projections, while on the lower-end of market range, are still on track as 1Q already accounted for 26% of our full year estimate. With global uncertainty still remaining, there are fewer price drivers ahead until we get better clarity from the developed markets. We are retaining our earnings projection, fair value of S$7.43 and HOLD rating.
No comments:
Post a Comment