SGX

SGX: 4Q13 results came in broadly in-line, with net profit at $87.6m (+43% y/y, -10% q/q) bringing FY13 net profit to $335.9m (+15%). This was in tandem with a rise in revenue to $202.3m (+28% y/y, +6% q/q) which brought FY13 revenue to $647.9m (+10%) The Securities division (+9%) remained the biggest earnings contributor, forming 38% of FY13 total revenue, fueled by a rise in total stock market capitalization to $954b as at end June13, +13% y/y. This was on back of improved market activities during 2H13 which raised the Securities daily average value (SDAV) by 11% to $1.5b and total turnover by 10% to $363.4b. The Derivatives division (+23%) registered a record year, contributing 28% to total group revenue from 25% y/y, as total traded volumes rose 32% to a record 100.6m contract, and average month-end open interest for the year grew 86% to a record 2.6m contracts. Issuer Services (+6%) was also a beneficiary of improving market sentiments, with total equity funds of $13.5b raised, +120% y/y, with primary equity funds of $8.1b raised from 30 new listings and secondary equity funds of $5.4b raised. The number of new bond listings also grew to 424, raising $196b, +21% y/y. Other divisions, namely market data, member services & connectivity, depository services and others saw muted improvements on a y/y basis for FY13, and formed 25% of remaining total revenue. Going forward, SGX note the need for capital raising and risk management remains robust in Asia despite uncertain global economic conditions and will continue to develop new products and services to capitalize on new opportunities, while strengthening its regulatory and risk management capabilities. The Board has proposed a final dividend of 16c per share, bringing FY13 dividend payout to 28c per share, representing a 3.7% yield. At current price, SGX trades at 22x forward P/E versus its 5 year historical average of 24x. Latest brokers ratings as follows: HSBC reiterates O/w with $8.50 TP Nomura maintains Neutral with $7.60 TP