Tuesday, January 17, 2012


SGX: Announced weak 2Q12 results which were in-line with bearish estimates.
2Q12 rev of $148m, -14% yoy and -17% qoq, while net profit at $65m, -19% YoY and -25.2% qoq.

Poor performance due largely to fall in securities rev at $53m, -34.4% yoy and -26% qoq, as ADT fell to $1.12b vs (1Q: $1.57b), although this was partially offset by a pickup in average clearing fee to 5.75bps (1Q: 5.57bps). Stated equity turnover velocity fell to 47% vs 1Q12 61%). All other segments also saw weaker contributions; with depository services, -13% qoq, Member services, -9% qoq and issuers-related fees -9% qoq.

Bottom-line was partially offset by a 4% yoy and 8% qoq fall in expenses (staff -11%,
tech -3%). Overall, 1H12 profit of $153m remains on track for consensus estimates for FY12E profit $315m, although there is downside risk if ADT falls below S$1.55bn (YTD Jan12: $0.9bn).

CEO maintains cautious outlook on Co. citing volatility and uncertainty in global mkts and did not completely rule out a bid for LME, and reaffirmed SGX’s commitment to pursue opportunities in Asia, where he sees more potential for SGX. Grp currently trades at 22x historical P/E which appears excessive vs historical average of 23x, in light of the poor sentiment outlook.

Ratings as follows:
Citi maintains Sell with $5.40 TP
CIMB maintains Sell with $5.43 TP.
Daiwa maintains Hold with $6.05 TP.
HSBC maintains O/w with $7.20 TP.
Deutsche maintains Buy with $6.80 TP
Macquarie maintains O/p with $7.21 TP.
Kim Eng maintains Buy with $6.90 TP.

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