SGX - RHB Invest 2017-01-16: SADV Jumped In 4Q16

SGX - RHB Invest 2017-01-16: SADV Jumped In 4Q16 SINGAPORE EXCHANGE LIMITED S68.SI

SGX - SADV Jumped In 4Q16

  • The Singapore securities market saw strong trading activities over the past three months. 2QFY17’s (Oct-Dec 2016) SADV of SGD1.06bn was up 9% QoQ, with strength in Nov 2016 attributable to the US Presidential elections. 
  • We maintain our FY17F SADV forecast of SGD1.27bn. 2QFY17 derivatives trading volumes were up a milder 3% QoQ, which appears unexciting but there is potential for more volume with the Dec 2016 commencement of the Shenzhen-HK Stock Connect. 
  • We maintain our BUY call with unchanged TP of SGD9.10 (26% upside).


We are projecting FY17F securities average trading volume (SADV) of SGD1.27bn

  • We are projecting FY17F securities average trading volume (SADV) of SGD1.27bn, given increased trading volumes in the first few trading days of 2017. SADV jumped in 2QFY17 to SGD1.06bn, up 9% QoQ and a strong 18% YoY. 
  • Trading activity picked up in Nov 2016, when the US Presidential elections were held.


Expect stronger China A50 Index Futures trading volumes

  • Expect stronger China A50 Index Futures trading volumes, which surged 6- 8 months after the commencement of Shanghai-HK Stock Connect in Nov 2014 – trading volumes surged in 2Q15. Following the commencement of Shenzhen-HK Stock Connect in Dec 2016, we are projecting stronger China A50 Index Futures trading volumes going forward.
  • Total derivatives trading volume in 2QFY17 of 41.37m – or 674,000 derivatives average daily contract (DADC) – was up 3% QoQ. 41% of the volume in 2QFY17 came from the China A50 Index Futures. We maintain our DADC assumption of 782,000 for FY17.


Singapore Kilobar Gold Contract is Shariah-compliant. 

  • In late Dec 2016, SGX announced that its Singapore Kilobar Gold Contract has become the world’s first Shariah-compliant gold futures. This exchange-traded, physically delivered gold futures was launched in Oct 2014, and is now certified by Amanie Advisors to be compliant with the Shariah standard on gold.


SGX remains attractive. 

  • We peg our TP to a target FY18F P/E of 25x (1SD above the 2-year mean of 22.6x), which gives us an unchanged TP of SGD9.10. Our TP is supported by our DCF fair value of SGD9.20. 
  • Note that SGX’s FY17F dividend yield of 4.5% is attractive, compared with the sovereign 10-year bond yield of 2.4%. 
  • We maintain our BUY recommendation on the stock. In this report, we also introduce our FY19 forecasts.
  • Key risk to our call would be global economic trends.




Leng Seng Choon CFA RHB Invest | http://www.rhbinvest.com.sg/ 2017-01-16
RHB Invest SGX Stock Analyst Report BUY Maintain BUY 9.100 Same 9.100





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