Towards Financial Freedom
Stronger Revenue Lifts 3QFY13 Results
SGX's 3QFY13 net profit rose 26% y-o-y (+28% q-o-q) to SGD98m on the back of a pick-up in average daily turnover (ADT) in the securities market to SGD1.7bn (17% y-o-y; +41% q-o-q), and a record quarter for derivatives. We raise our FY13-14 net profit projections by 4% p.a. and our fair value to SGD6.80 (21x FY14 EPS) from SGD6.50. However, we maintain our Sell call. April ADT has softened, suggesting a weaker
4QFY13.
4QFY13.
- Good pick-up in 3QFY13 results. SGX's 3QFY13 net profit of SGD98m (+26% y-o-y; +28% q-o-q) was at the upper end of our estimate range but in line with consensus numbers, with its 9MFY13 net profit of SGD248m (+8% y-o-y) accounting for 80% of our and 77% of consensus' full-year net profit estimates. SGX continued to exhibit good cost discipline and maintained its operating expense guidance of SGD295-305m for FY13. Our earlier projection stood at the top end of the range.
- Securities, derivatives lead the way. 3QFY13 net profit was buoyed by stronger securities (+15% y-o-y; +29% q-o-q) and derivatives (+26% y-oy; +17% q-o-q) revenue. Securities market ADT jumped 17% y-o-y (+41% q-o-q) to SGD1.7bn while the daily average derivatives volume in 3QFY13 surged to a new high of 479k (3QFY12: 316k; 2QFY13: 359k).
- Dividends. As expected, SGX declared an interim DPS of 4 cents (3QFY12: 4 cents), bringing the YTD DPS to 12 cents (9MFY12: 12 cents). We are forecasting a FY13 total DPS of 27 cents, similar to FY12. ¨ Forecasts. We raise our FY13-14 net profit projections by 4% p.a. after lowering our operating cost projections.
- Valuation and recommendation. We raise our FV to SGD6.80 from SGD6.50, based on unchanged target FY14 P/E of 21x. SGX is currently trading at a CY13 P/E of 24.5x. While not particularly excessive, we prefer Bursa Malaysia (Buy, MYR7.16, FV: MYR7.50) for its cheaper valuations (CY13 P/E 22x) and stronger earnings growth (2013F: 14%). We also note that April's ADT has softened to around SGD1.26bn, suggesting a potentially weaker 4QFY13 is in store. Thus, despite the commendable results, we maintain our Sell call on the stock.
Source: OSK
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