Analysts raise target prices for Singapore Exchange
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SGX's ability to retain liquidity here is a strong indicator of the successful execution of its multi-asset platform, according to Maybank Kim Eng.
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Analysts have raised their target prices for the Singapore Exchange (SGX) after the bourse operator reported strong earnings.
Last week, SGX posted a net profit of $239.8 million for the half year ended Dec 31, 2020, up 12.4 per cent from $213.3 million a year ago. Revenue went up across all three of its businesses: equities; fixed income, currencies and commodities; and data, connectivity and indexes.
DBS Bank maintained a "hold" on SGX - with a target price of $10.20, up from $8.40 - as it believes valuations are "getting rich". The bank's research team revised its FY2021-2022 earnings upwards by 1 to 3 per cent on higher revenue assumptions.
CGS-CIMB reiterated its "add" call on the Singapore bourse operator, with a higher target price of $11.61 - from $9 - on sustained trading volumes in its FY2021 forecast. It said SGX's successful migration of its customer base to its FTSE Taiwan futures offering shows promise of other initiatives that could narrow the earnings gap left by last year's MSCI licence expiry.
The CGS-CIMB research team expects equity turnover to sustain over the current financial year, given the low rate environment and macro uncertainty, supporting hedging demand. It raised its FY2021-2023 earnings forecast by about 17 to 19 per cent.
RHB and Maybank Kim Eng maintain their "buy" call on the stock. RHB raised its target price on SGX to $11.60 from $10.30, while Maybank KE increased it to $11.48 from $10.77.
RHB expects trading in both equity and derivative markets to be supported by a recovery in global economies. It raised its FY2021-2022 earnings forecast by 4 to 9 per cent on higher securities daily average value assumption.
For Maybank KE, higher contract pricing, strong equity market velocity and new product launches should continue to support the earnings momentum.
The bank's research team noted that derivative volumes increased 4 per cent on the year despite the exit of key MSCI contracts. Moreover, newly introduced FTSE contracts seem to be gaining traction.
"SGX's ability to retain liquidity here is a strong indicator of the successful execution of its multi-asset platform," Maybank KE said.
Shares of SGX closed 0.4 per cent lower at $10.05 yesterday.
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