Up to a dozen IPOs coming to Singapore Exchange by year-end

Singapore

THE year 2017 might be about to end, but stock market professionals are keeping busy.

As many as 10 to 12 initial public offerings (IPOs) are potentially in the pipeline by the end of 2017, said senior executives from the Singapore Exchange (SGX) on Wednesday evening.

This would push the total number of SGX IPOs to the "high 20s" from the 18 already done this year, said SGX chief executive officer Loh Boon Chye.

He was speaking as SGX unveiled an expected strong set of financial results for the three months to Sept 30.

Revenue was up 7 per cent to S$204 million from a year ago, while net profit was up 9 per cent to S$91 million. The numbers, for the first quarter of SGX's 2018 financial year (FY), were the strongest since Q1 FY2016.

It was driven by increased trading activity, positive sentiment and volatility in financial markets.

However, if net profit was annualised to S$364 million, it falls slightly short of expectations of an average annual net profit of S$372 million for FY2018 among 16 analysts tracked by Bloomberg.

An analyst who declined to be named told The Business Times that the reported quarterly profit slightly missed his expectations. But he remained bullish on the exchange.

"They are at an inflection point," he said. "The timing is important. Earnings will start going up, and they can increase their dividends."

The 7 per cent increase in quarterly revenue to S$204 million was driven by a 14 per cent rise in derivatives revenue to S$81 million.

Derivatives now make up two fifths of total revenue, and include equity, commodities and foreign exchange (FX) contracts.

Derivatives equity and commodities revenue rose 9 per cent to S$58 million mainly due to higher volumes in the Nifty 50, FTSE China A50, Nikkei 225 and Iron Ore futures.

Volumes increased 15 per cent to 46.2 million contracts but average fee per contract dipped to S$1.13 from S$1.18, due to a change in mix.

Revenue from the traditional equities and fixed income business, which accounts for half of total revenue, rose 2 per cent to nearly S$100 million.

It was driven by a 9 per cent increase in securities trading and clearing revenue. This was due to securities daily average traded value (SDAV) increasing 18 per cent to S$1.16 billion, up from S$0.99 billion a year ago.

Turning to the equities market, SGX executive vice-president Chew Sutat said that upcoming IPOs are spread out across both mainboard and Catalist firms.

Mainboard IPOs in the pipeline include Keppel-KBS US Reit, which filed its preliminary prospectus on Wednesday, and preschool operator MindChamps, which Singapore Press Holdings (SPH) owns a stake. SPH owns The Business Times.

Cromwell European Reit could also return to the market after recently dropping plans to list here.

It is said to be cutting some higher quality and hence lower-yielding Polish assets from its float, in a bid to sweeten the yield.

Mr Chew said that a couple of other real estate investment trusts (Reits), and an infrastructure play, could be in the pipeline.

On the secondary Catalist board, firms in the pipeline include food and beverage (F&B) and services firms, Mr Chew said.

He said the slew of IPOs is the result of some performing well, such as property agency APAC Realty being up 40 per cent since its offer, and events production firm Unusual tripling in price.

SGX closed down one Singapore cent to S$7.57 before results were out.