This is subject to SGX’s shareholders’ approval at its annual general meeting on Oct 9. Should the proposed increase go through, FY2026 will see a total dividend payout of 44.5 cents, while FY2027 and FY2028 will see total dividends of 48.5 cents and 52.5 cents per share, respectively.
SGX shares, which are up more than 25% year to date, have sunk some 3% after the fullyear results were released on Aug 8.
Among the most measured forecasts on the street is Morningstar Equity Research’s Roy Van Keulen, who raised his fair value estimate by 4% to $14.50. Still, this is below the current trading price.
“Following a two-thirds increase in the share price in a year, shares now screen as overvalued,” says Van Keulen.
The exchange’s “volatility-exposed segments”, which account for over half of the group’s revenue, benefitted from the US election and subsequent market turbulence from ongoing tariff and trade negotiations, notes the Morningstar analyst.
While he likes SGX’s “outsize volatility exposure, compared to other exchanges”, Van Keulen does not expect SGX to repeat the strong results from a volatile year. “We believe the prior year, which included assassination attempts against a [US] presidential candidate and dramatic shifts in trade policy, sets a high bar in terms of volatility.”
Accumulate on dips
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Analysts from RHB Bank Singapore, OCBC Investment Research and UOB Kay Hian (UOBKH) are muted in their outlook, with “neutral” and “hold” calls throughout.
RHB’s Shekhar Jaiswal thinks SGX’s implied yield remains “underwhelming”, and his $15.90 target price includes a 4% environmental, social and governance premium based on RHB’s proprietary methodology. “Although management has guided for higher dividends and our estimates exceed this guidance, the implied dividend yield remains well below the market yield.”
Jaiswal had previously mentioned that SGX’s “growing cash reserves” mean there is “room for improvement” in SGX’s dividend payout, and he thinks the current guidance has “potential for further upside”.
Despite the announced increase in dividends, management also signalled continued appetite for “strategic, value-accretive [and] bolt-on acquisitions”, notes Jaiswal.
Meanwhile, the $16.66 target price issued by UOBKH’s Roy Chen and Heidi Mo is just above OCBC’s $16.15. “Time is a friend”, say the UOBKH analysts, noting that their “hold” call is a result of SGX trading close to their target price.
SGX has maintained its medium-term guidance of group revenue (excluding treasury income) growth at 6% to 8% per annum, mainly driven by a low-to-mid-teens percentage growth in over-the-counter foreign exchange (OTC FX) and exchange-traded derivatives businesses.
Revenue growth will also come from mid- to high-single-digit percentage contribution by OTC FX to group ebitda, says management, coupled with low- to mid-single-digit expense increase and benign capex at a level lower than the historical average of 7% of group revenue.
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UOBKH thinks these goals are “achievable”, noting that SGX has over 30 companies in its medium-term IPO pipeline, according to head of global sales and origination Pol de Win — “the highest in years”.
“Management’s faster medium-term revenue growth guidance than cost growth implies potential margin expansion,” add UOBKH’s Chen and Mo. “We like SGX’s resilient multi-asset business model and believe SGX’s value would rise with time. Investors should accumulate SGX on share price dips.”
Phillip Securities’ Glenn Thum, too, thinks investors should “accumulate” SGX, raising his target price to $16.90 from $13.90 previously.
In his Aug 11 report, Thum says he expects SGX to maintain stable growth from its OTC FX business pillars and currency derivatives volumes and benefit from operating leverage.
Maybank, DBS bullish
SGX’s bulls come in the form of Maybank Securities’ Thilan Wickramasinghe, CGS International’s (CGSI) Tay Wee Kuang and DBS Group Research’s Lim Rui Wen, all with “add” or “buy” calls.
Wickramasinghe has raised his target price to $17.67 from $16.09, saying the conditions are right for a multi-asset venue like SGX.
For one, FY2025 cash equities revenue was ahead of expectations, thanks to renewed trading and clearing momentum. Market velocity reached 41%, the highest in 12 years, and Wickramasinghe estimates 16 IPOs in FY2026.
Aside from equities, SGX reports revenues from three other business segments: derivatives, fixed income, currencies and commodities, and platform and others.
“We believe the group’s multi-asset portfolio is a strategic advantage versus regional peers in delivering better revenue visibility,” says Wickramasinghe.
He estimates that SGX’s proposed dividend guidance will raise the payout ratio to 68%, up from 62% in FY2025. While this is still lower than the average 75% in the past 10 years, it provides a floor for absolute dividends in future, he adds.
CGSI’s Tay, meanwhile, has kept his “add” call on SGX but with a lower target price of $17.70 from $18.30, citing lower treasury income due to declining interest rates.
He notes that the Monetary Authority of Singapore (MAS) has yet to award some $3.9 billion of its $5 billion placement with fund managers, and the outcome of this Equity Market Development Programme could rerate the stock again.
Finally, DBS’s Lim has maintained her $18.20 target price on SGX — one of the highest on the street.
MAS’s equity market review group serves as “a powerful tailwind and catalyst”, she adds.
Securities daily average value (SDAV) growth in small- and mid-caps is 23% higher y-o-y, with total SDAV growth 27% higher y-o-y. “We believe the structural changes and multiplier effect from MAS’s [schemes] will continue to fuel the multiple re-rating,” adds Lim.
Read more about SGX's latest results:
SGX eyes bolt-on M&As; says it’s ‘confident’ in sustaining dividend growth
