SGX

SGX: A foreign broker attended a meeting hosted by SGX’s CEO Loh Boon Chye and CFO Chng Lay Chew in Hong Kong, where more light was shed on the exchange’s new strategic priorities announced last week during its earnings release.

The three priorities announced were 1) improving the liquidity of the securities market; 2) diversifying business mix to broaden revenue streams and reduce reliance on specific contracts; 3) maintain cost discipline by pacing operating expenses and keeping them aligned with business growth.

The broker noted that while there is no particular target for the mix of business over the next few years, management is targeting a more significant contribution from fixed income, currencies, data and listings revenue. Ultimately, the end goal for SGX is to become a more diversified exchange with a sustainable platform.

Management also did not rule out pursuing inorganic growth, if it would aid in accelerating its priorities.

Overall, the house is maintaining its Sell rating on SGX with a TP of $6.96, given limited structural changes to the exchange’s business, possible consensus downgrades in upcoming quarters and unattractive valuation levels.