发表于 23-10-2011 03:19 PM
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Singapore Exchange: Headwinds remain
By Carmen Lee
Tue, 18 Oct 2011, 09:35:46 SGT
Summary: Singapore Exchange (SGX) reported 1QFY12 net profit of S$88m, up 18% YoY. Derivatives volume rose 33% YoY to a record high of 322,152 contracts per day. Current global economic uncertainty has led to near-to-medium term cautious outlook. If protracted, this could cut equity or debt issues coming into the market. As the 1Q numbers were fairly in line with our expectations, we are retaining our full-year net earnings projection of S$324.5m. However, valuations for SGX and its peers have fallen in recent months, and we have lowered our valuation from 25x to 22x earnings, bringing our fair value estimate down from S$7.95 to S$7.00. Yield is decent at more than 4.5%. Maintain BUY. (Carmen Lee)
Better than consensus 1Q earnings. Singapore Exchange (SGX) posted a 12% YoY increase in 1Q FY12 revenue to S$178m, giving net profit of S$88m, up 18% YoY, and slightly better than consensus expectations of S$83m. The strong trading activity in Aug helped to lift SGX’s performance, as average daily trading value for Aug was S$2.0b, contributing to 1Q12 daily value of S$1.6b, an increase of 9% from the previous quarter. What stood out clearly this quarter was the record derivatives volume, up 33% YoY to a record high of 322,152 contracts per day. This resulted in a 26% rise in derivatives revenue to S$43m. Growth was fuelled by the Indian Nifty, Chinese A50 and Rubber futures contracts.
As a recap, several initiatives were introduced in the quarter including Reach (new securities trading platform), continuous trading for the securities market, and reduced minimum bid-ask spreads (to enhance trading). A total of S$1.3b was raised through equity listing, and it was a slow IPO quarter with only six new listings raising S$150m. The board has also declared an interim dividend of 4 cents for 1Q, unchanged from the last year, payable on 16 Nov 2011.
Headwinds remain; expecting quiet equity fund raising. Current uncertainty in the global environment has dimmed the prospects for SGX, as seen from both the decline in its share price as well as management’s cautious outlook for the near term. This could also result in fewer equity or debt issues, as share prices of most stocks are still down year-to-date, and with little price drivers in the near to medium term due to the volatile global environment. Still, SGX’s kicked off the financial year with several positives including strong contribution from its derivatives business and greater awareness and interest in ETFs (which saw a nearly doubling in average daily trading value to S$49m in 1Q).
Maintain BUY, but dropping fair value. As challenges remain ahead, earnings visibility is low. We believe that management will continue to roll out new products, to ready for a return in trading activities. As the 1Q numbers were fairly in line with our expectations, we are retaining our full year net earnings projection of S$324.5m. However, valuations for SGX and its peers have fallen in recent months, and we have lowered our valuation from 25x to 22x earnings, bringing our fair value estimate down from S$7.95 to S$7.00. Yield is decent at more than 4.5%. Maintain BUY.