Ahead of SGX’s 2HFY2025 results, Tay expects the bourse to report core patmi of $321.6 million, 17% higher y-o-y and 1% higher h-o-h, driven by strong trading volumes and demand for over-the-counter (OTC) foreign exchange (FX) products. Revenue for the second half of the year is likely to come in 6% higher y-o-y or 5% up h-o-h at $680.5 million, offsetting seasonally higher operating expenses (opex) due to the accrual of bonuses and increased marketing expenses in a new calendar year.
Based on SGX’s monthly statistics from January to May, Tay also estimates SGX’s securities daily average value (SDAV) to increase by 22% to $1.42 billion, while derivatives daily average volume (DDAV) is expected to climb by 13% y-o-y to 158.9 million contracts.
From January to May this year, FX derivatives volumes jumped 66% to 33.9 million contracts over the same period, with momentum likely to support over-the-counter (OTC) FX product sales in the second half. In 1HFY2025, OTC FX average daily volume grew around 36% y-o-y, closely tracking the 44% growth in FX derivative contracts.
Tay also views the equity market review to be a “second wind” for SGX. While he viewed the Monetary Authority of Singapore’s (MAS) $5 billion injection as “not significant” compared to SGX’s SDAV of $1.17 billion for the past 10 financial years, he believes that a “further slew of measures” by the government could revitalise trading activity.
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Recent and expected upcoming listings could attract investor interest to the overall equities market on SGX, boosting fees and trading volume, he adds.
To this end, the analyst has increased his FY2025 to FY2027 earnings-per-share by 6.3% to 12.2%. Revenue for FY2026 and FY2027 is projected to be $1.389 billion and $1.466 billion, respectively, putting SGX’s P/E at 23.82 and 22.52 times accordingly.
Coupled with a valuation rollover to FY2026, Tay’s raised target price is now pegged to 28 times price-to-earnings (P/E) from 23 times previously.
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“Given the variety of measures to spur trading volumes by the government, alongside volatility in global macroeconomic uncertainty, we think 6 to 8% revenue growth per annum over FY2025 to FY2027 is possible, although interest rate cuts would negatively impact treasury income, which could be a drag on group revenue for SGX,” says Tay.
At 1.10 pm, SGX shares were trading at $15.58, up by 42 cents.
