Derivatives  growth  was  strong,  but  it  has  a  smaller  revenue  share  than  securities.Securities revenue, which accounted for 36% share of revenue, was up 9% YoY, and SGX highlighted  that it  continues  to  make  good  progress engaging  retail  customers.    However, turnover  velocity  was  down  3  ppt  YoY  to  44%,  largely  the  consequence  of  international companies  turnover  velocity  down  9  ppt  YoY  to  64%.    What  is  more  exciting  is  the  21% YoY growth in derivatives revenue, supported by strong expansion in the China A50 futures and Japan  Nikkei  225  options.  However,  the  overall  impact on  revenue  is more muted as derivatives share of revenue is a smaller 28%.

Our FY13 earnings forecast is 2% lower than consensus expectation. SGX is guiding FY13 expenses of between S$295m and S$305m, and our forecast is closer to the top end of  the  range.    This  partly  explains  our  FY13  earnings  forecast  being  2%  lower  than consensus expectations.  

SGX declared an interim dividend of 4S¢ per share. We forecast FY13 total dividends of 27S¢,  unchanged  from  FY12.  This  gives  a  yield  of  3.5%,  which  is  respectable  but  not exciting.

Source: OSK