Hot stock: Singapore Exchange gains as analysts keep the faith

SHARES of Singapore Exchange (SGX) rose on Monday after the bourse operator said it would allow companies with controversial dual-class share structures to have their first, primary listing here.

Analysts were also positive that the momentum bodes well for SGX in the months ahead, with a few brokerages raising their target prices on the stock.

SGX rose 16 Singapore cents or 2 per cent to S$8.14 as at 9.45am.

SGX's CEO Loh Boon Chye told reporters on Friday during the company's results briefing that some companies might need a capital structure that supports the rapid scaling up of their business, and such an option comes as Singapore is becoming a magnet for tech startups.

DBS Group Research said that it expects SGX's earnings to grow by 4 to 11 per cent, after a relatively weak fiscal 2017. It raised its target price on SGX from S$8.40 to S$8.90.

"SGX's continued efforts to drive market liquidity and new product initiatives should bear fruit in the coming years."

DBS added that SGX's price-to-earnings valuation discount to Bursa Malaysia and Hong Kong Exchange has also widened, making it relatively cheap.

SGX reported a net profit for its second fiscal quarter that was flat year-on-year at S$88.4 million. Revenue was up 2.7 per cent to S$205 million.

Nonetheless, CIMB said that it expects derivatives to remain a key growth driver for SGX, as it offers a new Indian single-stock futures, as well as more commodities products.

"We also sense management's optimism on the 2018 IPO pipeline," it added.

CIMB raised its target price to S$8.50 from S$8.21, while keeping its "add" recommendation.