For FY2025, Tan is now expecting SGX to report a net profit of $649 million, up from its FY2024 net profit of $600 million. The analyst has forecast net profits of $656 million and $668 million for FY2026 and FY2027 respectively. The estimates are based on SGX sustaining its SDAV at $1.3 billion and DDAV growth of 5% from FY2025 levels.
In 2HFY2025, Tan expects SGX’s underlying profit to remain flat h-o-h at $324 million driven by a 13% h-o-h increase in SDAV and a 4% growth in DDAV but offset by seven lesser trading days and seasonally higher operating expenses (opex). Revenue for the 2HFY2025 is tipped to grow by 5% h-o-h while opex is expected to be seasonally higher with a 16% h-o-h increase. In FY2025, Tan expects SGX’s opex to increase by 2% y-o-y despite revenue growing by 13% y-o-y.
With the higher estimates, the analyst expects SGX to make quarterly dividends of 9 cents, representing an annualised yield of 2.4% although a $200 million share buyback programme or 1% of SGX’s market value based on cashflow generation poses a risk to his view.
Year-to-date (ytd), the analyst notes that SGX saw $149 million in net institutional inflows, marking the six largest in Singapore, investors who are likely expecting to see a robust set of FY2025 results and positive catalysts from the Monetary Authority of Singapore (MAS) review measures.
See also: DBS downgrades Genting Singapore to ‘hold’ amid mounting headwinds
Another sign of optimism for the review measures also appears in 72% of SGX’s listed companies with market capitalisations of over $400 million delivering positive returns ytd, compared to 41% of listcos with earnings per share (EPS) growth expectations, notes Tan.
Tan’s new target price implies an FY2026 P/E of 22 times.
SGX will report its FY2025 results before the market opens on Aug 8.
