Singapore Exchange Limited (SGX: S68), the only integrated securities derivatives exchange in Singapore, announced a robust set of results as trading volumes were lifted by buoyant markets. It had the best quarterly performance since FY 2008 when 4Q net profits jumped 43%.
For the full year, SGX recorded revenue of $715.1 million (up 10%) and a net profit of $335.9 million (up 15%). As Mr Magnus Böcker (the CEO of SGX) has said, “Our continuing investments in new products and wider distribution enabled us to benefit from increased market activities. Securities total traded value increased 10% to $363 billion. Our Derivatives market continued to deliver growth with a number of records including total traded volumes of 101 million contracts, up 32% year-on-year”.
Many companies would envy to have such high and consistent profit margins and return on equity (ROE) like SGX. Furthermore, SGX has steadily delivered increasing revenue for the past 5 years while profits have jumped more significantly during the current year.
On top of paying out constant dividends, SGX is still able to remain debt free and has large cash and cash equivalents of $613 million. That will provide SGX with the financial muscle to invest in its growth plans despite its failed bid to acquire Australian Securities Exchange in 2010.
SGX has also declared a final dividend of 16.0 cents, which brings it to 28.0 cents for the year 2013. It equates to a dividend yield of 3.7% at the closing price of $7.55. The total dividend is up 1 cent as compared to last year.
The prospects for SGX is closely related to the world economy and its operating environment. With improved sentiments across global capital markets, SGX may see increased trading and clearing volumes.
Looking forward, the outlook for capital raising (e.g. IPOs) and risk management activities in Asia remains positive over the long term. If SGX is able to capitalise on the rising market sentiments and expansion of various product segments, the outlook for the company is positive.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo own shares in Singapore Exchange Limited.