At under 50 minutes, Singapore Exchange ’s (SGX) Feb 6 results briefing was the shortest in recent memory, as analysts had few questions for the bourse operator’s highest first-half revenue and net profit since listing in 2000.
SGX posted adjusted net profit of $320.1 million for 1HFY2025 ended Dec 31, 2024, up 27.3% y-o-y; while adjusted ebitda was up 23.9% y-o-y at $426.9 million. Adjusted earnings per share was 29.9 cents, up from 23.5 cents this time last year.
Adjusted ebitda, net profit and earnings per share exclude “certain non-cash and non-recurring items that have less bearing on SGX Group’s operating performance”, says SGX, which “better reflect underlying performance”.
Still, the results were positive even without the adjustments. Unadjusted ebitda was 23.4% higher y-o-y at $425.3 million; while net profit would have risen 20.7% y-o-y to $340 million; and earnings per share would have come in at a higher 31.8 cents for 1HFY2025.
SGX also announced a new way of reporting revenue, which chief financial officer Daniel Koh says “aligns with global practice”. The presentation of revenue and expenses has been revised in FY2025 such that transaction-based expenses are netted off against operating revenue to show net revenue.
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According to the bourse operator, this net revenue allows for “better comparability across peers”. After deducting transaction-based expenses, net revenue increased 15.6% y-o-y to $646.4 million, with growth in all business segments. This figure includes associated treasury income, which grew $1.4 million y-o-y.
SGX’s board of directors has declared an interim quarterly dividend of 9.0 cents per share, up from 8.5 cents this time last year and unchanged h-o-h. This is payable on Feb 21. This brings total dividends in 1HFY2025 to 18.0 cents per share.
Though dividends are in line with expectations, some analysts wish SGX had been more generous.
RHB Bank Singapore analyst Shekhar Jaiswal, for one, said in January that he expected “strong” earnings growth in 1HFY2025, though he only forecast 17.5 cents in dividends.
With this earnings beat, however, Maybank Securities calls the 1HFY2025 dividend “disappointing”.
Likewise, Citi Research analyst Tan Yong Hong commends SGX’s “overall results beat”, with 1HFY2025 net profit at 57% of his full-year forecast, though quarterly dividends were only “in line” with expectations.
That said, Tan notes that SGX has “no commitment to a specific payout ratio”. Back in August 2023, SGX raised its quarterly dividend for the first time in 12 quarters to 8.5 cents for 4QFY2023, and also announced its target to raise dividends by “mid-single-digit” in CAGR “over the medium term”. Its 1HFY2025 dividend per share is up 5.9% y-o-y.
Higher revenue across the board
SGX reports revenue across four segments: fixed income, currencies and commodities (FICC); cash equities; equity derivatives; and “platform and others”.
First, revenue from SGX’s FICC segment increased 13.4% y-o-y to $159.1 million and accounted for 24.6% of total net revenue in 1HFY2025.
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Fixed income net revenue increased 22.8% y-o-y to $4.8 million. There were 395 bond listings raising $145.6 billion in 1HFY2025, compared to 489 bond listings that raised $131.7 billion a year earlier. Meanwhile, currencies and commodities net revenue increased 13.1% y-o-y to $154.3 million.
The increase in trading and clearing revenue was mainly from higher volumes in over-the-counter forex (OTC FX), currency derivatives and commodity derivatives, says SGX. OTC FX net revenue increased 35.7% y-o-y to $55.0 million.
OTC FX headline average daily volume (ADV) increased 35.4% y-o-y to US$136 billion ($183.73 billion).
Currency derivatives volumes increased 43.2% y-o-y to 33.0 million contracts, mainly due to higher volumes in INR/USD and USD/CNH FX futures contracts.
Commodity derivatives volumes increased 14.5% y-o-y to 32.9 million contracts, mainly due to higher volumes in iron ore derivatives, says SGX.
Second, SGX’s cash equities segment, which is the focus of an ongoing equities market review group, posted 22.3% higher net revenue of $192.6 million, accounting for 29.8% of total net revenue.
SGX recorded five new equity listings in 1HFY2025, which raised $19.7 million. This is down from four new equity listings that raised $19 million in 1HFY2024.
Secondary equity funds raised were $3.1 billion, up from $0.6 billion this time last year.
Securities daily average traded value (SDAV) surged 31.2% y-o-y to $1.3 billion and total securities traded value increased 34.4% y-o-y to $162.8 billion.
This was made up of cash equities, where traded value rose by 35.3% y-o-y to $156.9 billion; and other products, where traded value increased 12.8% y-o-y to $5.9 billion. There were 129 trading days in 1HFY2025, up from 126 this time last year.
SGX CEO Loh Boon Chye notes “increased participation” in cash equities — “not just in the banking stocks, but I think across the REITs and the [Straits Times Index]”.
“We will build on this momentum,” says Loh in response to The Edge Singapore. “There will be more product launches, whether that’s [in] the Singapore Depository Receipts (SDRs), Daily Leverage Certificates or ETFs. We are also looking to continue to onboard retail brokers, outreach to institutions [in both] research and education.”
SGX launched Hong Kong SDRs on Oct 30, 2024, for five mega-cap companies: BYD, HSBC, Bank of China, Alibaba and Tencent.
Third, equity derivatives net revenue increased by 21.6% y-o-y to $177.4 million and accounted for 27.4% of total net revenue. An 18.8% y-o-y increase in trading and clearing revenue was mainly driven by a 17.4% y-o-y increase in total equity derivatives volumes.
Higher volumes of FTSE China A50, GIFT Nifty 50, MSCI Singapore and FTSE Taiwan index futures contracts were partially offset by lower volumes of Nikkei 225 index futures contracts, says SGX.
The average net fee per contract for equity, currency and commodity derivatives was comparable at $1.30, largely flat from $1.31 this time last year.
Finally, SGX’s “platform and others” segment saw 1.7% higher net revenue in 1HFY2025, accounting for 18.1% of total net revenue.
Market data revenue rose 3.8% y-o-y to $25.1 million; connectivity revenue rose 8.7% y-o-y o $41.8 million; indices and other revenue fell 3.7% y-o-y to $55.3 million; and transaction-based expenses rose 4.3% y-o-y to $5.0 million.
Total expenses were comparable at $263.1 million in 1HFY2025, largely flat from $262.8 million this time last year. Higher variable staff costs were mainly offset by lower depreciation and amortisation and fixed staff costs, says SGX.
Adjusted total expenses are comparable at $257.3 million, from $256.4 million in 1HFY2024.
SGX’s total capital expenditure was $22.1 million in 1HFY2025, up 19.5% y-o-y. “We expect our expenses and capital expenditure to be at the lower end of our FY2025 guidance, previously guided at a 2%–4% increase and between $70 million [and] $75 million respectively,” says SGX.
Succession plans, market review
CEO Loh also fielded a pointed question from the media: Does he have a succession plan in place as he approaches his 10th year leading the exchange?
“I hope I can do better,” quipped Loh after some gasps and laughs from analysts and SGX executives. “It’s not about the CEO; it’s about the team. It’s a strong team. When the time comes, the board will make the decision. But as of now, I think the team is driving and gelling well, and we hope to continue to improve on our results.”
SGX’s latest annual report, released Sept 16, 2024, contained separate letters from Loh and chairman Koh Boon Hwee. While both leaders discussed the equities market review group, which had been launched just a month prior, it marked the first time since the FY2010 annual report that an SGX chairman had written separately from the CEO of the exchange.
Loh also sidestepped a follow-up question about whether the bourse would appoint a successor from within its ranks, repeating: “We’re working well as a team.”
CFO Koh took on the role on Dec 1, 2024, replacing Ng Yao Loong after four years. Ng, now head of equities, was present at the briefing but was not seated onstage.
Loh also declined to discuss the status of the review group, which has yet to make any recommendations in the six months since its launch, instead saying “the ecosystem is very heartened that the review group is taking a very holistic view”.
Pol de Win, who is in charge of attracting new listings as head of global sales and origination, says there is a “very healthy group of new economy companies” in the IPO pipeline.
According to him, a number of “good quality” and “sizeable” REITs are starting to look at the market, along with companies in the consumer and healthcare sectors.
Shares in SGX closed at $12.43 on Feb 5, prior to the release of its results. SGX shares climbed 17 cents, or up 1.4%, to $12.60 prior to the midday break on Feb 6. The share price has risen some 34% over the past year.
Table: SGX Group
