SGX

SGX (S$7.49): Striving for leadership in LNG pricing through derivatives
- attempting to gain pricing dominance in liquefied natural gas (LNG), as it launch more derivative products for LNG in 2Q17
- new contracts will be based on a new North Asia LNG price index that SGX introduced on Mon
- if successful, SGX could see an influx of derivative trading- this would boost commodities derivative trading, which was one of the rare bright spots in Aug (trading volume +59% y/y)
- But SGX is likely to face competition for these price indices, and the race is still wide open
- SGX is currently trading at 21.9x forward P/E and offers an indicative dividend yield of 3.7%
- The street does not have conviction on going long on SGX, as it has 7 Buy, 8 Hold, and 2 Sell rating, with a consensus TP of $7.78, on the counter.