Singapore Exchange 03 (Feb 11 - Dec 24)

[behappyalways]

Derivatives drive growth in May as securities continue to stumble
http://sbr.com.sg/stocks/news/derivativ ... ue-stumble

[behappyalways]

MAS unleashes scathing rebuke against SGX after back-to-back market outage
http://sbr.com.sg/financial-services/in ... ket-outage


Faulty wiring the culprit behind SGX's November market breakdown
http://sbr.com.sg/financial-services/ne ... -breakdown

[behappyalways]

Singapore Banker Faces Uphill Battle in Boosting SGX Trading
http://www.bloomberg.com/news/articles/ ... gx-trading


Chart of the Day: SGX has one of the weakest stock market turnovers in Asia
http://sbr.com.sg/stocks/news/chart-day ... rs-in-asia

[behappyalways]

SGX CFO: China to Remain Source of Singapore Listings
http://www.bloomberg.com/news/videos/20 ... e-listings

[winston]

not vested

SGX: Derivatives outlook is good

Singapore Exchange (SGX) reported an 8.8% increase in FY15 earnings to S$348.6m, in line with consensus expectations.

The star performer was Derivatives, which generated a 42% rise in FY15 revenue of S$295.7m, far surpassing the S$209.3m posted by Securities.

While the outlook for its Securities business is muted, Derivatives is likely to continue to drive growth in FY16, riding on the current volatile market especially in China which should benefit its A50 and Iron Ore contracts.

Management is proposing to raise the base dividend payout per quarter from the current 4 cents to 5 cents, to even out its dividend payout per quarter and to remove the lumpy final quarter payout.

Based on the same 23x valuation, we raised our fair value estimate from S$7.95 to S$8.16.

Maintain HOLD.

Source: OCBC

[winston]

not vested

SGD (SGX SP): SGD7.19
BUY (TP: SGD8.13)

Timely To Relook At This Monopoly With Net Cash

We are upgrading SGX to BUY with a SGD8.13 TP (13% upside). The amount of SGD1.18bn in securities ADT in the past three months was in line with our SGD1.17bn FY16 assumption; August derivatives volume surged 80% YoY (-14% MoM), but share price has fallen by 7.6% over this time frame.

We believe the negatives have been largely factored in. Being a monopoly with a net cash position offers it resiliency.

Securities market’s average daily turnover (ADT) remains respectable. 1QFY16 (Jun) securities market ADT of SGD1.18bn was 8% higher than FY15’s. We maintain our FY16 and FY17 securities market ADT assumption of SGD1.17bn and SGD1.27bn respectively.

August derivatives volumes doubled YoY. The China A50 Index Futures average daily volume of 403,000 in August was 35% lower MoM, although it represents a sharp 124% YoY spike. Correspondingly, the August total average daily derivatives trading volume of 814,000 was down 14% MoM but up 80% YoY – this is higher than our 754,000 assumption for FY16.

The recent softness of the Chinese equities markets has contributed to the China A50 Index Futures’ trading volume weakness and this volatility could add to Singapore Exchange’s (SGX) earnings fluctuations.

We roll forward our valuation to factor in FY17 earnings. Setting a 23x target FY17F P/E (a slight discount to the 5-year average of 25x), we derive a SGD8.13 TP vs our previous SGD7.58 TP. This is pegged to 22x FY16F P/E.

Using DCF as a corroborative valuation methodology, we derive a SGD8.20 fair value, which is close to our P/E-derived TP. We consider SGX is also attractive, given the company’s forecasted dividend yield in excess of 4%.

Limited share price downside risk, but good upside potential. If we assume unchanged securities ADT, but a P/E compression due to market conditions (setting a fair P/E at -2SD, we get a fair P/E of 20x, which would put SGX’s share price at ~SGD7.00.

Whilst the company traded around 14x P/E during the global financial crisis (2H08), we do not expect as severe a P/E compression this time around.

Source: RHB

[winston]

not vested

Singapore Exchange sustains growth in securities, derivatives and commodities in September.

Total securities market turnover value grew 7% y-o-y to $22.5 bn, despite fewer trading days in September 2015 as compared to September 2014.

Securities daily average value increased 18% y-o-y to $1.1 bn.

Total derivatives volume was 14.1m, up 33% y-o-y.

Iron Ore Futures volume was up 194% y-o-y.

Source: DBS

[winston]

not vested

SGX (SGX SP) 1QFY16 net profit of SGD99.3m (+28% YoY) was in line, representing 28% of our FY16 forecast.

1QFY16 SADV of SGD1.23bn rose 27% YoY, while derivatives average daily contracts traded surged 82% YoY to 862,000.

Maintain BUY with an unchanged TP of SGD8.13, pegged to 23x FY17 P/E.

While our TP is only 8% higher than current traded price, investors get an additional 4% dividend yield.

Source: RHB

[winston]

not vested

Singapore Exchange (HOLD, tp:S$7.98) - In the price

1QFY16 net profit of S$99.3m was in line at 26% of our full-year forecast.

DPS was raised to 5 Scts from 4 Scts previously, in line with prior guidance

We cut our FY16-18 EPS by 2-3% on expectations of lower derivative traded volume and clearing rate, and higher expenses

We upgrade to Hold from Reduce, as valuations are more palatable at 20x forward P/E, 0.5sd below its historical mean.

Source: CIMB

[winston]

not vested

Singapore Exchange reported 1Q16 net profit of S$99m (+28% y-o-y); revenue +30% to S$220m, in line.

A 5-Sct DPS was declared.

Securities revenue increased 14% y-o-y to S$55.9m and accounted for 25% of total revenue, compared to 29% in 1Q15.

Derivatives revenue increased 69% to S$90.9m, and now accounts for 41% (32% in 1Q15) of total revenue.

Outlook for Securities remains challenging.

SGX is diversifying its business mix to reduce reliance on Derivatives.

Maintain HOLD, TP S$7.80

Source: DBS