SGX share price opens lower despite higher third quarter earnings

Share price of Singapore Exchange (SGX) fell over 8% within the first 30 minutes of trading on Friday 24 April 2020.

Singapore Exchange (SGX) has reported a 38% growth in net profit for the third quarter of its 2020 financial year, on the back of higher trading volume amid volatile market conditions.

Net profit for the quarter came in at S$137.5 million – a 13-year high, versus S$99.7 million a year prior, with revenues of S$295.8 million – up 29% from a year prior.

EBITDA stood at S$186.2 million for Q3 of 2020 (up from S$134.2 million a year prior), while earnings per share was S$0.128 cents (up from S$0.93 in Q3 FY2019). The Board of Directors has also declared a dividend of S$0.75 cents per share (unchanged from a year ago), payable on 13 May 2020.

Following the financial results announcement, share price of SGX fell 8.4% within the first 30 minutes of trading on Friday 24 April 2020, based on IG trading data.

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SGX saw surge in trading volume in Q3 FY2020

Revenue and trading volume increased across all market segments in the latest quarterly report.

Fixed Income, Currencies and Commodities Business (FICC) revenue increased S$8.5 million or 23% to S$45.5 million from S$37.0 million a year ago, accounting for 15% of total revenue.

Fixed Income revenue rose by 24% year-on-year to S$4.0 million, while Currencies and Commodities – Derivatives revenue increased 23% year-on-year to S$41.5 million (S$33.7 million).

Equities revenue, which comprises Equities – Cash as well as Equities – Derivatives revenues, rose 31% to S$217.3 million (versus Q3 2019’s S$165.7 million), accounting for 73% of total revenue.

Equities – Cash revenue increased 38% to S$111.3 million (up from S$80.4 million in Q3 2019), accounting for 38% (up from 35% in Q3 2019) of total revenue. Equities – Derivatives revenue increased 24% to S$106.0 million (S$85.3 million).

In terms of volume, Currencies and Commodities gained 39% to 14.9 million this quarter, versus 10.7 million in Q3 of 2019.

Equities Cash saw a surge of 48% year-on-year in trading volume this quarter, while Equity Derivatives trading volume grew 24% to 61.5 million in Q3 of 2020, versus 49.5 million a year prior.

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SGX raises FY2020 operating expense guidance by S$20 million

Loh Boon Chye, Chief Executive Officer of SGX, said in a statement that activity from US and European clients trading outside of Asian trading hours has grown to 20% of total derivatives volumes as a result of the heightened market volatility.

‘With uncertainty around the eventual economic and financial impact of COVID-19 and path to recovery, these elevated levels of volatility are likely to be prolonged,’ said Loh.

He added that from FY2021 (01 July 2020) onwards, SGX will adopt half-yearly financial reporting, with dividends continued to be paid on a quarterly basis.

Finally, in view of the higher market activity and other company changes – including the launch of a S$5 million Covid-19 care package, SGX has revised its initial FY2020 operating expense guidance of between S$465 million and S$475 million higher to between S$485 million and S$495 million.

Read also: SGX share price hits 10-year high as trading volume surges

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