SGX upgraded to Add by CGS-CIMB after ‘stellar quarter’

Singapore 50 dollar bill

CGS-CIMB upgraded SGX to Add from Hold after the exchange operator reported a “stellar quarter,” with its best quarterly results in 10 years.

It noted fiscal third-quarter net profit of S$100 million, up 15.5 percent on-year, was in line with its expectations, amid a rise in securities daily average traded value (SDAV) and derivatives volume.

“We expect market volatility to remain as a near-term driver for SGX, while its medium-term prospects could benefit from new products and initiatives,” it said in a note dated Friday.

CGS-CIMB added that SGX’s earlier announced plans to launch new India equity derivatives products could minimise the disruption from the licensing change.

“Its constant engagement and consultation with existing market participants on the successor products give us confidence that there should be a seamless transition and minimal earnings disruption upon the licensing expiry in August,” it said.

The target price was raised to S$8.20 from S$7.85 after CGS-CIMB raised its fiscal 2018-2020 earnings forecasts by 2.2-4.5 percent. It also pointed to dividend yields of 3.8-4.1 percent.

The stock was up 1.32 percent at S$7.66 at 1:49 P.M. SGT on Monday.