Singapore Exchange (SGX) reported 1HFY2022 adjusted net profit of $221.8 million, down 3% y-o-y from $228.0 million this time last year.
The adjusted figures exclude certain non-cash and non-recurring items that have less bearing on SGX’s operating performance.
Total revenue of $521.6 million was comparable to $520.8 million from the same period last year.
Revenue from SGX’s underlying core businesses, excluding treasury income, rose 6% to $501.0 million from $472.6 million in 1HFY2021, with higher trading and clearing revenues from equity, currency and commodity derivatives.
The board of directors has declared an interim quarterly dividend of 8.0 cents per share. This brings the total dividends in 1HFY2022 to 16.0 cents per share.
SGX’s subsidiaries, BidFX and Scientific Beta, achieved collectively a 20% increase in revenues to $40.4 million accounting for 8% of SGX’s total revenue.
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Adjusted EBITDA was $309.6 million, down from $321.2 million, while adjusted earnings per share stood at 20.7 cents, slightly lower than the 21.3 cents this time last year.
During the period, total FX average daily volume (ADV), comprising both on-exchange futures and OTC, increased 46% from US$39 billion to US$57 billion.
SGX’s FX ECN went live in November 2021 with successful trades completed across different currency pairs.
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The acquisition of FX platform MaxxTrader was completed in January 2022.
Equities
Equities revenue, comprising both cash and derivatives revenues, declined 5% to $334.5 million, accounting for 64% of total revenue, down from 67% in 1HFY2021.
Revenue from cash equities decreased 5% to $190.7 million, accounting for 37% of total revenue, down from 39%.
There were six new equity listings in the period, which raised $1.3 billion. Among them was Digital Core REIT, which raised US$600 million.
Daily average traded value (DAV) and total traded value declined 8% and 7% to $1.2 billion and $150.4 billion respectively.
Equities – Derivatives revenue dipped 4% to $143.8 million, accounting for 28% (29%) of total revenue.
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Trading and clearing revenue increased mainly due to higher average fees from SGX FTSE China A50, Nifty 50 and FTSE Taiwan Index futures. Treasury and other revenue decreased mainly from lower treasury income, which declined primarily due to lower yield.
Average fee per contract for Equity, Currency and Commodity derivatives was higher at $1.50 ($1.27) mainly due to higher fees for the SGX FTSE China A50 Index futures and the absence of introductory fees for the FTSE Asia expansion suite implemented a year ago.
Fixed Income, Currencies and Commodities (FICC)
FICC revenue increased 15% to $114.0 million, accounting for 22% of total revenue.
There were 492 bond listings with amounts issued of $209.4 billion, up from 358 bond listings that issued $169.9 billion.
Currencies and Commodities – Derivatives revenue increased 16% to $107.4 million, accounting for 21% of total revenue.
Trading and clearing revenue of $84.2 million was up 18% from $71.4 million. Trading and clearing revenue grew mainly due to higher clearing revenue from BidFX and increased volumes in commodity and currency derivatives.
Commodity derivatives volumes increased 17% to 14.1 million contracts, while currency derivatives volume increased 6% to 12.6 million contracts . Treasury and other revenue increased mainly due to higher revenue from platform services.
Data, Connectivity and Indices
Data, Connectivity and Indices revenue increased 3% to $73.1 million, accounting for 14% of total revenue.
Market data and Indices revenue of $41.4 million was up 5% from $39.6 million, mainly due to higher revenue from Scientific Beta and an increase in data subscription.
Adjusted total expenses increased 4% to $252.1 million, which exclude amortisation of purchased intangibles, acquisition-related expenses and other one-off items.
Operating expenses increased 8% to $215.6 million, mainly from higher staff costs and technology expenses.
Average headcount for the half-year held steady at 980, including 139 staff from Scientific Beta and BidFX.
Depreciation and amortisation decreased 5% to $46.5 million, mainly due to fully depreciated system-related assets. This was partially offset by an increase in depreciation relating to BidFX.
Total capital expenditure was $16.5 million, down from $19.8 million. These investments were mainly for upgrades to SGX’s Titan OTC trade reporting system, and the setup of infrastructure for BidFX and the NSE-SGX Gujarat International Finance Tec-City (GIFT) Connect.
Total expenses for FY2022 will be kept between $565 million and $575 million, says SGX, even with the inclusion of expenses relating to MaxxTrader. SGX’s capital expenditure guidance for FY2022 remains unchanged at between $60 million and $65 million.
Loh Boon Chye, chief executive officer of SGX, says: “We are making good progress in executing our multi-asset strategy. Our underlying core revenue has grown, with strong performance in our currencies and commodities, healthy market share and yields for our key equity derivative products, as well as steady growth in our market data and index business."
He adds: "In the last two years, we have made $1 billion worth of acquisitions and investments to leapfrog our multi-asset strategy and capture the growth opportunities across asset classes and platforms... As Asian economies recover, demand for Asia-centric portfolio investment and risk management solutions will rise. China remains high on investors’ radar, which is expected to spur more activity for our range of China-access products. We will continue to broaden our securities and derivatives product shelf, enhance our global connectivity to facilitate new capital flows, and boost our digitalisation and sustainability efforts."
"On the capital raising front, we are seeing clear interest from potential issuers on the back of our new Special Purpose Acquisition Companies (Spacs) framework and joint interagency funding initiatives3 for high-growth companies. Overall, we are optimistic of the opportunities ahead as an expanded SGX Group," says Loh.
Shares in SGX closed 2 cents lower, or 0.21% down, at $9.40 on Feb 4.
Photo: Bloomberg
