OVERVIEW:
The counter operates an integrated securities exchange and derivatives exchange in Singapore and related clearing houses. It provides listing (IPO), trading, clearing, depository, market data, etc. Security products includes stocks, business trust, REIT, ETF, notes, etc. Derivative products comprise of foreign exchange and interest rate products, commodities, forwards contracts, etc.
ANALYSIS:
[1] Although profit margin has been sliding, the counter delivered stable earning result over past five years. Return of Equity maintained at average 36%.
[2] Its share price movement has been closely tracking STI index before 2015. While index fell to five years bottom range, the counter managed to maintain at middle range since 2015. Its diversified product range contributed to such stability.
[3] With acceptance among shareholders of Baltic Exchange, the acquisition is pending for approval from UK authority. Baltic Exchange owns benchmark indexes for global shipping rate and provides trading platform for freight derivatives market. A successful acquisition would enhance SGX's products and services, including futures trading and thus boost earnings going forward.
[4] Impending commencement of Shenzhen-Hong Kong Stock Connect could help raise trading volume in China A50 Index Futures.
[5] Management aims to distribute 80% of earning or 0.2 per shares as annual dividend, whichever is higher. Investor could expect annual dividend at 0.28 per share.
PRICE vs YIELD CHART:
Generally, the counter price moves in channel from 7.3 to 7.7 when there is not much unexpected turbulence. STI has been quiet ever since crude oil rebounded from 16 year bottom last Feb. It showed its resilience in few panic moment, such as Brexit, FOMC, etc. Blue chip counters were seen stagnant, but mid to small counters were experiencing huge surge in buying interest since 2Q16. Considering such market condition, it is expected SGX shall maintain current earning, thus current price (3.8% dividend) presents opportunity to accumulation. A defensive play while waiting market to change bullish.
*** Note: Same counter has been mentioned in Jun[6] 2016 ***
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