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Singapore Exchange - RHB Invest 2022-05-26: Soft Near-Term Earnings Outlook

SINGAPORE EXCHANGE LIMITED (SGX:S68) | SGinvestors.io SINGAPORE EXCHANGE LIMITED (SGX:S68)

Singapore Exchange - Soft Near-Term Earnings Outlook

  • While higher treasury income from US Federal Reserve (US Fed) rate hikes, as well as improved data, connectivity and indexes (DCI) and fixed income, currencies and commodities (FICC) revenue should support higher FY23F profit, SGX (SGX:S68)'s FY22F earnings could remain soft amidst higher cost growth and a weak cash equities turnover.
  • While global macroeconomic uncertainties could lead to better-than-expected trading volumes, we note SGX is trading above the historical average P/E.
  • NEUTRAL, new S$10.40 target price from S$10.00, 7% upside, as we roll forward our valuation basis to FY23F.



YTD FY22 market statistics tracking our estimates.

  • SGX has seen a y-o-y decline in cash equities turnover over the last two months (March and April). The securities daily average value (SDAV) came in at S$1,554m (down 8% y-o-y) and S$1,271m (down 1% y-o-y) respectively in March and April. This brings the year-to-date SDAV to S$1,274m for FY22, which is ~5% higher than our FY22F SDAV of S$1,219m.
  • SGX’s derivatives segment saw a sharp uptick in trading activity, with average daily trading volumes (DDAV) of 1.14m (+11% y-o-y) and 1.04 (+25% y-o-y) in March and April. Year-to-date DDAV is tracking ~2% below our FY22F estimates.


Our FY22 estimates are above consensus’.

  • We estimate SGX will report S$625m of EBITDA and S$447m of profit in FY22F. This is higher than the consensus estimates of S$608m and S$434m, respectively. As our revenue estimate is in line with consensus’, we believe Street may be factoring in higher operating costs for FY22F.


Reasonable valuation; rolling forward the valuation to FY23F.

  • SGX’s FY23F P/E line with its historical average P/E.


Including earnings and target price sensitivity on FY23 estimates.

  • As the uncertain macroeconomic environment could persist well beyond Jun 2022 and likely boost SGX’s earnings, we have included the FY23F earnings and target price sensitivity analysis in Figure 1 and Figure 2 in report attached below.
  • Downside risks:
    1. Higher operating costs for FY22F;
    2. slower ramp up in revenue contribution from recent acquisitions.
  • Upside risks:
    1. Higher-than-estimated SDAV from the potential pipeline of ETFs, REITs, and Special Purpose Acquisition Company (SPAC) listings; and
    2. continued global macroeconomic uncertainties leading to better-than-expected derivatives volumes.
  • See





Shekhar Jaiswal RHB Securities Research | https://www.rhbinvest.com.sg/ 2022-05-26
SGX Stock Analyst Report NEUTRAL MAINTAIN NEUTRAL 10.40 UP 10.00



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