3 Things Investors Should Know About Singapore Exchange Limited’s Latest Fiscal Fourth Quarter Earnings

Singapore Exchange Limited (SGX: S68) is the only stock exchange operator in Singapore. But it does more than just run the local bourse – the company has three business lines, namely, Equities & Fixed Income, Derivatives, and Market Data & Connectivity.

In late July, Singapore Exchange released its fourth quarter and full year earnings for its fiscal year ended 30 June 2017 (FY2017). Let’s take a look at three useful pieces of information investors may want to know from the announcement:

1. The overall result

The following table shows some important numbers from Singapore Exchange’s income statement for FY2017 and FY2016:

Singapore Exchange FY2017 full year earnings announcement

We can see that the company’s revenue and profit attributable to shareholders both fell slightly.

Loh Boon Chye, the chief executive officer of Singapore Exchange, gave the following comments about the company’s performance in the earnings announcement:

“We achieved creditable results in a year of relatively low volatility in global markets. Our diversified multi-asset revenue base enables us to sustain consistent financial performance through different market environments.”

2. Segmental performance

Here’s a table showing year-on-year changes in the revenues for Singapore Exchange’s various business segments for the fourth quarter and whole of FY2017:

Singapore Exchange FY2017 full year earnings announcement

For FY2017, Derivatives was the relatively disappointing segment as its revenue fell by 7%. According to Singapore Exchange, this was driven by lower volatility in the global environment.

Market Data & Connectivity was the standout performer. It benefitted from higher data usage for trading, risk, and other back office applications.

3. What lies ahead

As investors, we rely on many tools, including management’s forecasts, to help us gain insight on what to expect for the near- to long-term performance of our investments’ businesses.

With regard to Singapore Exchange, this is what the company said about its next 12 months in its earnings release (emphases are mine):

Looking ahead, there are signs of improving market sentiments. We see greater optimism in Asia’s economic growth prospects and more interest from companies looking to raise capital. We expect Asian market activities to return to the higher levels of past years. As a leading risk management hub we are well placed to meet the needs of market participants.

As we grow our business, we will focus on building a stronger multi-asset exchange across geographies and invest strategically. At the same time, we will continue to optimise our resources and align our expenses with business growth. Our FY2018 operating expenses are expected to be between $425 and $435 million, and technology-related capital expenditure to be between $60 and $65 million”

In short, Singapore Exchange hinted that FY2018 would be a better year. On the other hand, operating expenses would be up from S$399.0 million to between S$425 and S$435 million.

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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 Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool Singapore has a recommendation for Singapore Exchange.