Numbers in S$ million unless stated otherwise.
| Six Months Ending | 31 Dec 2023 | 31 Dec 2022 | % Change |
|---|---|---|---|
| Revenue | 592.2 | 571.4 | 3.6 |
| Gross Profit | 296.1 | 284.1 | 4.3 |
| Net Profit | 281.4 | 284.6 | (1.1) |
| EPS (in cents) | 26.3 | 26.6 | (1.1) |
FX is a growing contributor to SGX's bottom line. FX futures volume grew 23.8% y/y while OTC FX ADV (average daily volume) increased 46.4% y/y. Commodity futures volume also grew 48.3% y/y. Weak spot remains in cash equities and equity derivatives, which account for 26.9% and 27.1% of the total revenue respectively. Cash equities revenue declined 5.6% y/y while equity derivatives revenue declined 6.9% y/y. Total capex (capital expenditures) remained steady at $18.5M (vs. $17.8M in 1H2023). A quarterly DPS of 8.5 cents was declared, which will be paid out on 20 Feb 2024.
My Thoughts
It is a fact that the Singapore market isn't as active as Hong Kong, and IPOs are getting rare. The decline in equity revenue was expected. Thankfully, SGX has developed other revenue streams - FX and FICC trading, market data and connectivity etc. With an operating margin around 50%, SGX should be able to grow stronger. Management did not increase capex significantly, which hints that the current technology stack should suffice to minimize technical disruption, which plagued the company during the last decade. SGX is not getting a lot of love from professional investors, with institutional holdings declining from a year ago. Nonetheless, SGX's valuation is undemanding relative to history and peers (SGX P/E: 19.7, HKSE: 24.3, JPX: 30.2). I will deploy more capital to build a bigger stake.
Enjoyed this post? Never miss out new posts by subscribing here.
No comments:
Post a Comment