SINGAPORE EXCHANGE LIMITED (SGX:S68)
Singapore Exchange - Strong Market Statistics For May 2022; NEUTRAL
- Singapore Exchange (SGX, SGX:S68)’s May market statistics pointed to a strong m-o-m improvement, with securities daily average value (SDAV) and derivatives daily average volume (DDAV) rising 18% and 13%. While annualised FY22F (Jun) SDAV is now tracking ahead of our estimate, the FY22 year-to-date SDAV is 6% y-o-y lower.
- Consensus FY22F EBITDA and profit are 2-3% below our estimates. We maintain forecasts, as costs could surprise on the upside. While SGX's earnings should grow in FY23, its forward P/E is now in line with the historical average.
- Maintain NEUTRAL rating on SGX with S$10.40 target price, ~9% upside.
SGX's year-to-date-FY22 securities market turnover is ahead of, and derivatives turnover is in line with our estimates.
- Although SGX has seen a m-o-m increase in its cash equities turnover, its May 2022 SDAV of S$1,505m was still down 6% y-o-y. This brought year-to-date SDAV to S$1,283m for FY22, which is ~5% higher than our FY22F SDAV of S$1,219m.
- Broad optimism over China’s economic recovery and higher volatility in global markets translated to a sustained rise in SGX’s derivatives trading activity, with DDAV at 1.17m (+23% y-o-y, +13% m-o-m). Thanks to such strong numbers in May, the year-to-date DDAV is now tracking in line with our FY22 estimates.
Our FY22 estimate for SGX is above the Street forecast.
- We expect SGX to report S$625m in EBITDA and S$447m in profit for FY22 – which are higher than the Street estimates of S$606m and S$436m. As our revenue estimate is in line with that of the consensus, we believe the Street may be factoring in higher operating costs for FY22F. We keep our estimates for SGX unchanged, as costs could surprise on the upside.
SGX's valuation is in line with the historical average.
- SGX’s FY23F P/E is almost in line with its historical of S$9.60.
- See
- Downside risks:
- Higher operating costs for FY22F;
- slower ramp-up in revenue contribution from recent acquisitions.
- Upside risks:
- Higher-than-estimated SDAV from the potential pipeline of exchange traded funds, REITs, and special purpose acquisition company listings; and
- continued global macroeconomic uncertainties leading to better-than-expected derivatives volumes.
Shekhar Jaiswal
RHB Securities Research
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https://www.rhbinvest.com.sg/
2022-06-14
SGX Stock
Analyst Report
10.400
SAME
10.400
