SGX posts 1% lower H1 profit at S$281.6 million

THE Singapore Exchange (SGX) on Thursday (Feb 1) posted a 1 per cent year-on-year drop in net profit to S$281.6 million for its first half FY2024, from S$284.6 million.

Earnings before interest, taxes, depreciation and amortisation for H1 grew 3.2 per cent to S$344.6 million.

Earnings per share (EPS) stood at S$0.263, down from S$0.266 in H1 FY2023.

After adjusting for certain “non-cash and non-recurring items” that have less bearing on SGX’s operating performance, its net profit would have risen 6.2 per cent from S$237 million to S$251 million, and its EPS would be S$0.235.

Revenue for the half year increased 3.6 per cent to S$592.2 million, driven by higher revenues from the currencies and commodities segment, as well as the platform and others segment. This was, however, partially offset by lower contributions from cash equities and derivatives equities segments.

Loh Boon Chye, chief executive officer of SGX, said that muted global economic growth and geopolitical uncertainties may affect market sentiment in the year ahead.

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“Nonetheless, the resilience of our multi-asset strategy, as well as healthy financial position and discipline, will enable us to capitalise on conditions across cycles.

Expanding solutions

“To drive growth, we will focus on expanding our solutions to capture opportunities in Asia, grow our emerging products and further strengthen our global distribution and network,” he added.

The fixed income, currencies and commodities (FICC) segment registered a 28.1 per cent increase in revenue to S$151.9 million, representing 25.6 per cent of the total revenue for H1.

Specifically, fixed income revenue was down 8.4 per cent to S$3.9 million. This consisted of S$2.5 million in listing revenue, which fell 1.4 per cent from the year-ago period, and S$1.4 million from corporate actions and other revenue, which dropped 19.1 per cent.

“There were 489 bond listings raising S$131.7 billion, compared with 449 bond listings raising S$104.3 billion a year earlier,” the bourse operator noted.

Currencies and commodities under FICC registered a 29.5 per cent increase in revenue to S$148 million. Commodities derivatives volume, in particular, increased 48.3 per cent.

At a briefing to discuss the company’s latest financial results, Ng Yao Loong, the chief financial officer of SGX Group, said that iron ore continued to be “a standout performer” in SGX’s commodities franchise as volume grew almost 50 per cent year on year.

Ng added that he expects the FICC segment to be on track to grow in its mid-teens percentage range over the medium term. 

Revenue from cash equities, which made up 26.9 per cent of total revenue, was down 5.6 per cent to S$159.6 million. Listing revenue, in particular, fell 3.3 per cent to S$14.6 million.

Revenue from derivatives equities declined 6.9 per cent to S$160.7 million.

Ng attributed the decline mainly to the drop in total equity derivatives volumes. He noted that Gift Nifty volume, which is SGX-traded futures on India’s NSE Nifty 50 Index, was down 39 per cent on a year-on-year basis. This was because SGX was in the process of migrating its members and clients to the Gift Connect.

Nevertheless, Loh said that he expects volumes of Gift Nifty contracts to normalise to pre-migration levels within the next 12 to 18 months. 

Platform and others revenue, accounting for 20.3 per cent of total revenue, increased 8 per cent to S$120.1 million.

Total expenses rose 3 per cent to S$296.1 million, mainly from higher staff costs and technology costs, offset by professional fees and lower royalties due to the absence of Nifty royalties under the Gift Connect partnership.

“We are cautious on the near-term outlook as prospects for global growth appear muted. As such, we will remain prudent in managing our expenses and capital expenditure,” said SGX.

It expects expense growth in FY2024 to remain similar to the 3 per cent observed in the first half year.

“Our projected capital expenditure for FY2024 is anticipated to be within S$70 million to S$75 million, lower than our previously guided S$75 million to S$80 million range.”

On its existing convertible bond that is due in March this year, Ng said that SGX will consider “some form of refinancing” assuming the bond does not convert to equity. 

Market volatility

Loh noted that looking ahead, 2024 could be another year of uncertain economic backdrop. “While interest rates are starting to stabilise and possibly decline, geopolitics will continue to dominate and could dull economic growth globally. This could affect market sentiment and risk appetite.”

The record number of elections in major markets this year could also lead to some volatility in markets, he added.

“We are cautiously optimistic that investors will turn to our derivatives to manage portfolio risks.”

The board has declared an interim quarterly dividend of S$0.085 per share, payable on Feb 20. This brings total dividends in H1 FY2024 to S$0.17 per share.

On Thursday, shares of SGX : S68 0% were down 0.2 per cent or S$0.02 at S$9.39.