Singapore Exchange 03 (Feb 11 - Dec 24)

[winston]

not vested

S'pore Exchange plans bond trading platform launch in Q1

SINGAPORE: Singapore Exchange Ltd (SGX) is looking to launch a corporate bond trading platform in the first quarter of 2016 as it seeks to expand its product suite in an effort to boost revenue, its CEO said.

SGX is seeing a business opportunity in offering a platform for fixed income as regulatory changes prompt global investment banks to scale back in this segment.

“Other than revenue diversification, we look at this also in terms of SGX being a multi-asset platform,” Loh Boon Chye, 51, said in an interview conducted as part of the Reuters Global Investment Summit in Singapore.

The veteran banker, known for his close ties with financial institutions at home, took the helm at SGX in mid-July from Magnus Bocker, who over five years built the derivatives business into the main source of revenue for the bourse.

SGX is one of the main listing platforms for Asian corporate issuers, with more than 2,000 bonds listed in 19 currencies and from issuers based in 34 countries. But SGX is looking to develop this further by allowing bonds denominated in US dollar, yen and euro to be traded on its platform.

SGX is one of the first Asian exchanges developing a bond trading system, which comes as investment banks such as UBS and Credit Suisse are cutting back on fixed-income businesses to shrink their balance sheets.

“We see that as a market solution for us to provide the platform so that banks can also trade and trade more without a lot of inventory,” said Loh, who used to head Asia-Pacific global markets at Bank of America Merrill Lynch and earlier worked at Deutsche Bank in Singapore for 17 years.

Loh said SGX is also working on introducing more yuan-denominated products, including Exchange Traded Funds.

Responding to a question on anaemic IPOs in Singapore, Loh said: “On the mainboard, we did have a few IPOs in the last few months ready to list, but we were not helped by market conditions.”

While Singapore is the biggest centre in Asia for foreign exchange trading and has seen strong growth as a derivatives centre, the average daily value of shares traded on its bourse trails far behind rivals in Hong Kong and Tokyo and is less than that of Thailand’s stock market.

Loh said a direct listing framework with China had helped increase the number of queries on potential listings. Measures to improve liquidity in the securities market have started to have an impact on SGX, he said.

For July-September, SGX reported its highest quarterly net profit in about seven years, boosted by a strong performance in the fast-growing derivatives business.

Source: Reuters

[winston]

not vested

Investment Thesis

We maintain OW on SGX, as we see 28 cents of DPS as secure.

Steady dividends, a lack of balance sheet risks and stable revenues are likely to drive the stock’s performance, in our view. We expect cash volumes to stay range-bound and derivatives volumes to experience a slowdown.

However, a good mix of major contracts (Nikkei, Nifty, A50, etc.) should ensure that overall turnover remains resilient.


Valuation

The stock trades at a 21.0x dynamic P/E, 0.5 s.d. below the mean P/E of 22.3x. Our Dec-16 PT of S$8 is based on the mean dynamic P/E.


Risks to Rating and Price Target

Downside risks include lower-than-expected volumes, lower-than-expected revenues, higher-than-expected opex and a value-eroding deal.

Source: JPM

[winston]

not vested

Downgrading to Neutral on continued weak volumes

■ We reduce our earnings by 9% given continued weak market activity, reducing our FY17E ADT to S$1.

November 2015 volumes continue to be weak, with ADT of S$0.97 bn.

Key trends in November 2015 were:

(1) Equity markets (30% of revenues). November's average daily turnover (ADT) was down 13% YoY at S$0.97 bn, down 8% MoM. December so far is weaker still, tracking below S$1 bn.

(2) Derivatives markets (35%). Derivatives volumes were up 13% YoY in November 2015, and up 20% MoM. The momentum picked up due to stronger China A50 volumes (+42% MoM), with decline in December.

(3) Depository services (15%). These fees are more based on equity volumes than value, with volumes down 27% YoY in November 2015.

(4) Listings (10%): There was no equity listing in the month, with bond listings still the main source of new fund raisings.

Investment case. The key investment case for SGX is the longer-term growth through both equities growth and success in its strategy to become an Asian regional gateway, with derivatives being the medium-term driver, in our view. Nearer term, its fortunes are more linked to current equity market volumes.

Catalysts. Market trading volumes, IPOs and subsequent capital raisings and the success of new product launches (i.e., forex products).

We reduce our target price to S$8.00 (from $10.00) and as such downgrade our rating to NEUTRAL (from Outperform). The current share price implies 21x FY17E earnings, but note strong yield support (~4%).

Source: CS

https://doc.research-and-analytics.csfb ... uGvFNQw%3d

[winston]

not vested

SGX named Global Exchange of the Year

Source: The Star

http://www.thestar.com.my/business/busi ... ?style=biz

[winston]

not vested

Exchange operator Singapore Exchange Limited (SGX: S68) has been handing out some festive – the company had upped its interim dividend by 20% from four cents per share a year ago to five cents in the current fiscal year.

Singapore Exchange is also committed to pay out annual dividends which are no less than 80% of its annual net profit or $0.20 per share, whichever is higher.

We may want to cast a watchful eye on the company’s ability to continue growing its derivatives business segment though – it has been one of the key drivers of the company’s revenue growth over the past year.

Source: Motley Fool

[winston]

not vested

SGX: Focusing on cutting costs

Singapore Exchange (SGX) posted a [b]15.7% QoQ drop in net profits[/b] to S$83.7m.

As expected, Securities was a main drag, with [b]revenue down 16.7% QoQ [/b]and contributing only 24% to total group revenue.

Adding to this was the 14.7% QoQ drop in its Derivatives revenue to S$77.6m – a business that has seen average revenue of S$85m per quarter in the past three quarters.

Facing a tough environment ahead, management is focusing on managing cost, which could result in lower costs of between S$15m-S$30m.

Taking into account the weaker market conditions, we have lowered our FY16 and FY17 earnings estimates and using the current lower valuations of its regional peers, we are cutting our fair value estimate from S$8.16 to S$7.06.

With a dividend yield of 4.2% and total return of slightly >10% to our FV, we are maintaining our BUY rating.

Source: OCBC

[winston]

not vested

SGX - 2Q16 results for SGX in line; 5cts DPS declared for the quarter.

Upgrade to BUY on valuation basis; TP remains at S$7.80.

2Q16 results for SGX in line. 5cts DPS was declared for the quarter.

1H earnings account for 49% of our FY16 earnings.

Securities revenue down 10%; continued growth from Derivatives.

Though outlook for both Securities and Derivatives market remains challenging, we upgrade to BUY on valuation basis.

TP remains at S$7.80. On a forward PE and P/B basis, SGX is currently trading at below -2SD level, which is very attractive.

Relative to peers like Bursa Malaysia and HKEX, SGX is also trading at lower PE multiples.

Dividend yield is attractive at 4.7% for FY16F

Source: DBS

[winston]

not vested

SGX ( SGX SP, BUY, TP: SGD8.13)
Derivatives Showed Resilience

Results Review

2QFY16 net profit of SGD83.7m (-3% YoY) was in line, representing a quarter of our FY16 forecast.

Maintain BUY with an unchanged SGD8.13 TP (22% upside), pegged to 23x FY17 P/E. 2QFY16 securities total value traded was down 9% YoY, while derivatives volume was down a milder 2% YoY.

We remain optimistic on the derivatives market potential, and SGX’s P/E valuation is more than 2SD below the historical average.

Source: RHB

[winston]

not vested

Singapore Exchange: Is It Time to Buy?

Down 24% since May, the stock has a high return on equity and 4% yield. It’s also exposed to the market rout.

By ISABELLA ZHONG

Source: Barron's

http://www.barrons.com/articles/singapo ... 1453364985

[behappyalways]

Singapore's Bourse in Preliminary Talks to Buy Baltic Exchange
http://www.bloomberg.com/news/articles/ ... c-exchange