SGX's first-half profit up 4%

BOURSE operator Singapore Exchange (SGX) posted a 4 per cent rise in first-half net profit to $165.8 million after a bullish stock market in the later part of last year drove up trading volumes.

Revenue rose 6.3 per cent to $324 million as daily average total trading values of stocks rose to $1.6 billion for the period July 1 to Dec 31 last year, compared with $1.2 billion a year earlier.

Chief executive Magnus Bocker, who chaired his first briefing of SGX's results since taking over on Dec 1, said: 'Our stronger IPO pipeline suggests that the issuance side of our business is expected to see a better year across our markets and key sectors.'

Although Singapore lagged well behind Hong Kong last year with its strong listings record, Mr Bocker argued that SGX is doing a better job than many other global and regional exchanges.

He also said that valuations for stocks in certain sectors such as banking remain very attractive.

Second-quarter revenue rose 2.7 per cent to $150.7 million. But net profit for the three months fell 3.9 per cent to $71.8 million.

One reason was a rise in operating expenses due to the payout to outgoing chief executive Hsieh Fu Hua and an initial payment to Mr Bocker.

There were also increased technology costs from implementing new systems such as Quest-ST for securities, and Quest-DT for derivatives.

Another factor eating into the bottom line was the less active derivatives market. Derivatives, including trading of futures, for example, thrive on volatility. Although the market rose in the second quarter, it was less volatile than the final quarter of 2008 when markets were in panic.

Futures and options clearing revenue fell 26 per cent to $30 million, mainly due to less trading related to the Nikkei 225 Stock Index.

DMG Research said that SGX's earnings are 'unexciting' and has kept its 'sell' recommendation on the company.

Net asset value per share rose from 61.8 cents as of Dec 31, 2008 to 65.1 cents as at Dec 31 last year. Earnings per share for the quarter dipped from 7.02 cents to 6.75 cents.

A dividend of 3.75 cents was declared, up from 3.5 cents previously. The results were announced after the market closed. SGX shares ended two cents higher at $8.36.

Source: Straits Times, 19 Jan 2010.