SGX shares drop over 5%; H2 net profit falls 20.5% on lower revenue

SINGAPORE Exchange (SGX) on Thursday saw its shares hammered after reporting a 20.5 per cent decline in net profit for the second half on the back of lower operating revenue.

Net profit for the six months ended June 30, 2021 fell to S$205.6 million, or 19.2 Singapore cents on a per share basis, down from S$258.6 million or 24.2 cents per share in the prior-year period.

By 11 am, SGX stock was down S$0.65 or 5.39 per cent to S$11.40.

A final quarterly dividend of eight cents per share was proposed, similar to the year earlier. If approved, it brings total dividends in FY2021 to 32 cents, up from 30.5 cents per share last year.

The group's operating revenue fell 6.8 per cent on year during the second half to S$535.1 million, with the decline coming from its equities segment.

However, operating revenue for the full year was slightly higher at S$1.06 billion, up 0.3 per cent compared to FY2020. Even so, SGX's full-year net profit fell 5.6 per cent to S$445.4 million.

SGX said underlying business revenue was up 7 per cent, excluding the decline in treasury income, amid a low interest rate environment.

SGX chief executive Loh Boon Chye said: "We achieved a strong performance as we invested in growing our business, delivering similar record revenues compared to last year amidst a challenging environment."

He added: "Notwithstanding the lower treasury income, our core business segments remained robust, with our fast-growing subsidiaries, Scientific Beta and BidFX, providing an added boost. While the low interest rate environment will continue to impact our treasury income, we believe it will also spur demand for our multi-asset offerings as investors seek enhanced returns."

For the full year, SGX's largest business segment, equities, saw operating revenue decline 7.7 per cent to S$701.1 million.

However, operating revenue grew under its Fixed Income, Currencies and Commodities (FICC) and Data, Connectivity and Indices (DCI) segments.

FICC revenue rose 23.5 per cent during the year to S$211.8 million, accounting for a fifth of the group's revenue. Excluding BidFX, a subsidiary acquired in July last year, FICC revenue would be comparable to the prior year, at S$172.1 million.

Meanwhile, the DCI segment also saw revenue rise 17.7 per cent to S$143.1 million, making up 14 per cent of the group's total revenue. Excluding contributions from Scientific Beta, DCI revenue would have been S$108.2 million, similar to FY2020.

SGX subsidiaries Scientific Beta and BidFX contributed 7 per cent to the group's total revenues in FY2021. Last month, the company also announced the acquisition of FX trading platform MaxxTrader. Together with this, SGX said revenue contribution from recently acquired subsidiaries would exceed 9 per cent.

On Wednesday, SGX shares rose 1 per cent or S$0.12 to close at S$12.05.

READ MORE: SGX's non-equities revenue growth boosted by recent acquisitions