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Quarterly Net Earning Dips 2% at Singapore Exchange Limited

SGX logo singapore exchangeThe local stock market regulator and operator, Singapore Exchange Limited (SGX: S68), or SGX, posted its second quarter of 2014 (2Q 2014) results.

Total revenue increased 2% year-on-year to S$165 million. The rise in total revenue was mainly due to a 16% surge in revenue from Derivatives, even though revenue from Securities fell 13%.  Net profit was, however, down 2% to S$75 million, as compared to 2Q 2013. Earnings per share (EPS) was at 7.0 Singapore cents, down from 7.1 Singapore cents in the previous year.

For the quarter, net profit margin and return on equity (ROE) were 45.3% and 45.5% respectively.

There were a total of nine listings in the quarter, raising S$1.4 billion compared with eight listings raising $0.8 billion in 2Q 2013. New initial public offerings include Linc Energy (SGX: TI6), Viva Industrial Trust (SGX: T8B) and ValueMax Group (SGX: T6I).

The balance sheet looks pristine with no zero debt and a cash hoard of a cool S$702 million. The net cash generated from operations for the quarter was at S$61 million, as compared to S$73 million generated last year. The capital expenditure for 2Q 2014 was at S$9 million.

For the first half of 2014 (1H 2014), total revenue was up 8% to $349 million and net profit was up 11% to S$167 million, as compared to 1H 2013. EPS rose 1.5% to 15.6 Singapore cents. Net profit margin was at 47.6%.

Magnus Bocker, CEO of Singapore Exchange, said, “We posted second-quarter net profit of $75 million, down 2% from a year earlier. Our derivatives business saw sustained growth and now accounts for 32% of total revenue. The securities market had a challenging quarter due to lower participation by both retail and institutional investors. The global economy is showing moderate signs of recovery. We will continue to invest in new products and services, expand international distribution, and strengthen our regulatory and risk management capabilities.”

In the next two quarters, SGX will be having huge capital expenditure requirements as it will be investing between $35 – $40 million to “fit out our new premises for operational resilience, better efficiency and enhanced customer service”.

The company declared an interim dividend of 4.0 Singapore cents per share, unchanged from last year.

Separately, SGX announced that it will be introducing circuit breakers, end of next month, as an “additional market safeguard”.

The shares of SGX last traded at $7, translating to a historical PE ratio of 21 and a dividend yield of 4%.

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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 Sudhan P doesn’t own shares in any companies mentioned.