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The Good And Bad That Investors Should Know About Singapore Exchange Limited’s Latest Earnings Update

Last Friday, stock exchange operator Singapore Exchange Limited (SGX: S68) released its earnings update for the first quarter of its financial year ending 30 June 2019 (FY2019). Let’s look at both the negatives as well as positives found in the company’s latest results.

The positives

Firstly, Singapore Exchange’s operating revenue for the first quarter of FY2019 increased by 2.2% year-on-year to S$208.9 million, driven mainly by a stronger performance in its Derivatives segment. The company has three primary business segments: Equities and Fixed Income; Derivatives; and Market Data and Connectivity. Meanwhile, the company’s net profit grew 0.4% to S$91.0 million.

Secondly, Singapore Exchange increased its interim dividend by 50%, up from S$0.05 per share a year ago to S$0.075 per share.

Thirdly, the company continues to maintain a strong balance sheet. As of 30 September 2018, Singapore Exchange had S$840.4 million in cash on the balance sheet with no debt.

The negatives

Firstly, the Equities and Fixed Income business segment saw its revenue fall by 13.3% year-on-year to S$86.4 million. The decline was due to lower revenues from the Issuer Services and Securities Trading and Clearing sub-segments.

Next, Singapore Exchange’s operating expenses grew by 4.1% to S$102.5 million, a faster pace than the company’s revenue growth. The higher expenses was due to higher staff costs (from an increase in headcount) and professional fees.

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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. The Motley Fool Singapore has a recommendation for Singapore Exchange Limited.