What Investors Need to Know About Singapore Exchange Limited’s Latest Earnings

On Friday, local bourse operator, Singapore Exchange Limited (SGX: S68), announced its financial results for the second quarter ended 31 December 2017. The company has three primary business segments – Equities and Fixed Income, Derivatives, and Market Data and Connectivity.

Here are 10 things investors should know from the latest earnings announcement:

1. Revenue went up 2.7% year-on-year to S$205.1 million. For the quarter, Equities and Fixed Income posted a fall in revenue while the other two segments saw revenue growth.

2. Equities and Fixed Income’s revenue fell 3.8% to S$97.5 million. Derivatives’ revenue rose 11.2% to S$83.3 million while Market Data and Connectivity’s revenue expanded by 3.9% to S$24.2 million.

3. Due to higher expenses year-on-year, operating profit inched up by only 0.6% to around S$103 million.

4. Profit attributable to shareholders stepped up by 0.1% to S$88.4 million.

5. Net profit margin dropped from 44.2% last year to 43.1% in the latest quarter.

6. Singapore Exchange’s diluted earnings per share (EPS) was flat at S$0.082.

7. As at 31 December 2017, the company had S$743 million in cash on the balance sheet with no debt. As a comparison, at the end of June last year, it had a higher net cash position of S$796.4 million.

8. Free cash flow for the reporting quarter was S$61.7 million (S$75.9 million in operating cash flow and S$14.2 million in capital expenditure). This was up 6.2% compared to a year ago when free cash flow was S$58.1 million (S$72.2 million in operating cash flow and S$14.1 million in capital expenditure).

9. An interim dividend of five cents per share was declared, unchanged from a year ago.

10. Singapore Exchange’s chief executive, Loh Boon Chye, gave the following outlook:

“Looking ahead, we aim to keep pace with the positive momentum achieved over 2017. Besides expecting more listings, we will strengthen our Asian derivatives foothold through new product offerings in equities, commodities and FX. Synergies with the Baltic Exchange are also coming through with more Asian members and a new LNG Index in the pipeline. As we continue to expand our business through strategic investments and collaborations, we intend to establish a Euro Medium Term Note programme to provide us with the flexibility to fund organic or inorganic growth, when the need arises.”

At the price of S$8.17 currently, Singapore Exchange is going at 25 times its trailing earnings and has a dividend yield of 3.4%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Singapore Exchange Limited. Motley Fool Singapore contributor Sudhan P owns shares in Singapore Exchange Limited.