The exchange’s securities daily average value (SDAV) climbed 14% m-o-m and 2% y-o-y to $1.2 billion while total securities market turnover value rose 3% m-o-m to $23.7 billion.
For the FY2023, however, both securities turnover and SDAV “disappointed” Jaiswal’s expectations with declines of 14% and 13% on a y-o-y basis respectively. FY2023’s SDAV stood 2% lower than the analyst’s forecast.
SGX’s derivatives daily average volume (DDAV) also stood lower-than-expected with the FY2023’s DDAV coming in 4% below Jaiswal’s forecast. However, June’s DDAV surged by 15% m-o-m and remained flat y-o-y.
Following June’s statistics, Jaiswal has trimmed his earnings estimates for FY2023 to FY2025 by 3% to 4%.
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“We still maintain our below-consensus forecasts, and reiterate our weak outlook for SGX’s cash equities business. Its forward P/E is at the historical mean, i.e. fairly valued,” he writes.
At its share price of $9.90 as at Jaiswal’s report on July 14, he notes that SGX’s shares have outperformed the benchmark Straits Times Index (STI) but the company “lacks near-term catalysts”.
“Amidst the relatively defensive nature of its earnings, year-to-date (ytd), SGX’s share price has outperformed the STI by 7%. However, this brings its forward P/E in line with its historical P/E mean of [around] 22x. While SGX’s non-cash equity businesses (ie the fixed income, currencies & commodities and equity derivatives business) are key long-term growth drivers, we continue to maintain our below-Street FY2024 earnings for now,” he says.
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He adds: “SGX’s stock offers a dismal 3.4% forward dividend yield. We value the stock by applying a 22x P/E on its FY2024 earnings per share (EPS).”
Despite his lowered earnings estimates, Jaiswal has upped his target price marginally to $9.90 from $9.80 previously. His target price includes an environmental, social and governance (ESG) premium of 8% to its fair value estimate of $9.20 as SGX’s ESG score is four notches above the country median.
As at 4.36pm, shares in SGX are trading 13 cents lower or 1.36% down at $9.44.
