πππSGX $SGX(S68.SI)$
In December SGX reached a 52 week high of SGD 13.09 but in January, it has dropped to SGD 12.09 on Thursday's closing. Is it a good buy?
Let's check out its FY2024 earnings report. On 8 August 2024, SGX reported FY2024 adjusted net profit of SGD 525.9 million, 4.5% higher from the previous year of SGD 503.2 million. Adjusted EBITDA was up at SGD 711.6 million compared to SGD 688.6 million in the previous year. Adjusted earnings per share was 49.2 cents in comparison with 47 cents in the previous year.
Revenue increased 3.1% to SGD 1.231 billion compared to SGD 1.194 billion in the previous year. This was mainly driven by higher revenues from Currencies and Commodities and Platform which was partially offset by lower Equities and Derivatives revenue.
SGX Board of Directors has increased its final quarterly dividend to 9 cents, representing an increase of 5.9% for the year.
According to SGX's CEO Loh Boon Chye, SGX's multi asset strategy has yielded positive results over the years and has remained its core differentiator.
Revenue growth in FY2024 was led by strong volumes in SGX's currencies and commodities businesses as it expands its customer base and drove higher activities. SGX's currencies and commodities franchises are on a healthy growth momentum with volumes doubling over the last 3 years.
SGX's Equities businesses showed stronger activity in the 2nd half of the financial year with equity derivatives daily average volume and securities daily average value increasing 11% and 21% respectively.
SGX is pushing ahead with its efforts to increase market participation, product development and adoption as well as cross border connectivity.
SGX is also working closely with the Review Group set up by MAS to recommend measures to strengthen the Equities market development in Singapore.
SGX's Foreign Exchange Platform saw Average Daily Volume jump 47% year on year to reach USD 111 billion in FY2024.
In the Commodities sector, Iron ore and Freight forwarding agreement contracts saw robust volume growth of 52% and 23% year on year respectively.
Going forward, SGX is targeting to grow its group revenue by 6% to 8% per annum in the mid term by increasing its suite of offerings to attract a wider spread of investors.
SGX launched 5 new Hong Kong Depository Receipts (SDRs) on October 30 2024. The Hong Kong SDRs are a great way for investors to access Hong Kong stocks without having to invest in the Hong Kong Stock market. They can also offer lower minimum investment amounts than investing in Hong Kong stocks directly. The 5 HK SDRs are Alibaba, BYD, HSBC, Bank of China and Tencent.
This latest launch has broadened SGX's slate of SDRs following the 8 Thai SDRs that were launched earlier.
SGX is expected to report strong earnings growth for 1H2025 ended December 31 2024 on February 6 according to RHB Analyst Shekhar Jaiswal. Jaiswal also expects SGX to announce an interim dividend of 17.5 cents per share along with the first half results, up from 17 cents per share in 1HFY2024.
Analysts are bullish on SGX with an average Target price of SGD 12.80, an upside potential of 5.8%.
I am a long term investor of SGX since 2022. I also like that SGX pays quarterly dividends. The current dividend yield is 2.8%. SGX will go ex dividend in February 2025.
I believe that SGX is undervalued as it has a wide moat being the only bourse operator in Singapore. With the global interest rate environment stabilising and ongoing government initiatives to revive the Singapore equity capital market, there are strong tailwinds for SGX to perform well. Singapore is a gateway for companies wanting to expand into South East Asia and with more family offices being set up in Singapore, these companies may look to diversify their investor base by seeking a secondary listing on SGX.
Go Long Go Strong Go SGXππππππππππ°π°π°πΈπ¬πΈπ¬πΈπ¬
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