“We roll our valuation into the new financial year and based on peers’ average forward PER of 23x, we raise our fair value estimate to $7.83 from $7.53,” says analyst Carmen Lee in a Friday report.
To recap, SGX posted 4QFY17 net earnings of $85.2 million, +10.9% y-o-y and +2.6% q-o-q. This led to full year earnings of $339.7 million, slightly below Bloomberg consensus estimate of $347.3 million.
See: SGX reports FY17 earnings to $340 mil; expects Asian market activities to return to higher levels of past years
Excluding one-off items, net profits would have been $347.4 million. Its Equity and Fixed Income (EFI) revenue, which accounted for about 51% of total revenue in FY17, was flat for the year although listing revenue was boosted by a record number of bond listings, raising some $384.7 billion.
See also: UOBKH raises TP on SIA to $6.22, FY2026 earnings to see lift on fuel cost savings
Derivatives revenue fell 6.8% to $303 million in FY17, largely due to a drop in volume as the number of contracts declined 10%. Market Data and Connectivity bucked the downtrend and posted a 7% rise in revenue for the year.
A final dividend of 13 cents was declared, making full year payout of 28 cents, same as last year.
Management is guiding for FY18 operating expenses of $425 million to $435 million and technology-related capital expenditure of between $60-$65 million.
Update: Shares in SGX closed 5 cents higher at $7.59.
