SGX's Q2 earnings up, more IPOs expected

The Singapore Exchange (SGX) expects a healthy flow of initial public offerings (IPOs) in the coming months after a solid second quarter that boosted earnings.

While there were only two new stock listings in the three months to Dec 31, total funds raised from equity and bond listings rose 48 per cent to $92 billion.

Securities trading was also active and helped lift SGX's total revenue for the period to $199.6 million, up 3 per cent year on year.

Net profit for the period rose 5 per cent to $88.3 million.

"Subject to market conditions, we expect the number of listings in the second half of financial year 2017 to be higher than the first half," chief executive Loh Boon Chye said at a results briefing yesterday.

"Even on a calendar-year basis, 2017 versus 2016, the pipeline looks healthy. If market conditions hold out, we will have more IPOs."

Questions on the SGX's attractiveness as a listing destination have been hovering for a while, particularly with a slew of home-grown firms announcing plans to delist.

One of these, Osim International, was yesterday reported to be eyeing an IPO in Hong Kong.

Osim did not respond to media queries on the matter.

Mr Loh said in relation to the Osim speculation: "If you look at the case of Osim - it was listed at a PE (price-to-earnings ratio) of 13, and when it was delisted, the PE was 20.

Clearly it had done well listed on the SGX."

Aside from the uncertain competitive landscape, the SGX's performance has remained steady.

The higher earnings last quarter came on the back of stronger market activities, as investors returned to equities after the United States presidential election and confirmation of rate hikes.

The average daily value of traded securities rose 17 per cent to $1.09 billion while the value of total trades in the quarter rose 17 per cent to $69.8 billion.

As a result, equities and fixed-income revenue was up 6 per cent year on year to $101.4 million in the second quarter.

This offset the 3 per cent drop in derivatives turnover, which was 38 per cent of the group's total, to $75 million.

Cost controls also showed results with expenses unchanged at $97.2 million.

Expenses for the financial year are now expected to be between $405 million and $415 million, $15 million lower than the previous forecast.

Earnings per share for the quarter were 8.2 cents, up from 7.8 cents a year ago, while net asset value was 85.4 cents a share as at Dec 31, down from 92.5 cents as at June 30.

An interim dividend of five cents a share was declared, unchanged from last year.

SGX shares closed up three cents or 0.4 per cent to $7.48 yesterday ahead of the results announcement.

whwong@sph.com.sg

This article was first published on Jan 20, 2017.
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