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Singapore Exchange Limited’s Latest Earnings: Capping off a Year of Growth

Singapore Exchange Limited (SGX: S68) – or more popularly known as SGX – reported its fourth-earnings for the fiscal year ended 30 June 2015 (FY2015) yesterday evening. The reporting period was for 1 April 2015 to 30 June 2015.

As the only local bourse-operator in Singapore, SGX holds a monopoly position and derives its revenue from a variety of sources. You can learn more about the company in here and here or catch up with its previous quarter’s earnings here.

Financial highlights

Here’s a quick take on the latest financial figures from SGX:

  1. Quarterly revenue rose 24.9% to $215.6 million on a year-on-year comparison. For the whole of FY2015, revenue was up 13.4% to $778.9 million.
  2. Net profit for the fiscal fourth-quarter jumped by 24.3% year-on-year to $96.2 million. Meanwhile, net profit for the whole of FY2015 was $348.6 million, up 8.8% from a year ago.
  3. Subsequently, SGX’s earnings per share (EPS) for the reporting quarter saw a 25% increase from 7.2 cents to 9 cents. The share market operator made 32.6 cents in EPS for FY2015, a nice 9% increase from FY2014.
  4. Cash flow from operations came in at $143.2 million for the fourth-quarter of FY2015 with capital expenditures clocking in at $25.5 million. This gave SGX a healthy positive free cash flow of $117.7 million, up a healthy 66% from the S$70.9 million seen a year ago. Annually, SGX recorded positive free cash flow of $346.6 million for FY2015, a nice jump from FY2014’s $286.9 million in free cash flow.
  5. SGX ended FY2015 with a strong balance sheet. As of 30 June 2015, the firm had $632.6 million in cash and equivalents and no debt.

In all, SGX experienced a nice uptick in revenue and profit for the quarter as well as for the fiscal year. Management had proposed a final dividend of 16 cents per share (unchanged from a year ago), bringing the total dividend to 28 cents per share for the full fiscal year (again unchanged from FY2014).

Operational highlights

Majority of SGX’s revenue growth for the reporting quarter came from the derivatives segment, which grew a stupendous 64.4% year over year. In fact, the derivatives segment emerged as the largest source of revenue both in the fiscal fourth-quarter as well as the whole of FY2015. In contrast, the securities segment only enjoyed a relatively tiny 4.4% increase in revenue for the reporting quarter.

With the reduction of the board-lot size from 1,000 units to 100, SGX reported that the monthly average number of retail investors trading stocks that were part of the market benchmark, the Straits Times Index (SGX: ^STI), have increased by 9% in the six months following the January 2015 commencement of the board-lot size change.

In March 2015, SGX also implemented the transition to a minimum trading price of $0.20 for Mainboard-listed companies.

Loh Boon Chye, the new chief executive of SGX who took over only in the middle of July, had a few comments on his company’s latest performance:

“SGX has delivered a good set of results for the year. We are conscious of the challenges ahead and the need to address new listings activity and work with our stakeholders towards our common goal of a more liquid and higher-quality securities market.

We are optimistic about our business prospects, and will continue to invest in building our platform. The current outlook for the global economy remains uncertain and volatile. We expect this to pose challenges to our Securities market, but support continued growth in the demand for our Derivatives products.

Uncertainties in the Chinese market could influence our Derivatives trading volumes, and increasing competition from global exchanges will affect our financial results over time.”

Foolish summary

As of its closing price of $8.23 yesterday, SGX traded at a price-to-earnings ratio of 25.3 and has a trailing dividend yield of around 3.4%.

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The team will be at Invest FAIR Singapore on 15 August (Suntec Centre, Booth B-16), so come join us! Chat with us at our booth, and see our MAS-licensed Director, David Kuo, give his official SGX investor presentation. You won't want to miss this! Add Invest FAIR Singapore to your calendar today.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.