SINGAPORE (July 28): OCBC is keeping its “hold” call on Singapore Exchange on muted earnings outlook and the continued decline in the derivatives business.

That said, Asian stocks have done well so far this year and valuations have edged higher despite market uncertainty.

“We roll our valuation into the new financial year and based on peers’ average forward PER of 23x, we raise our fair value estimate to $7.83 from $7.53,” says analyst Carmen Lee in a Friday report.

To recap, SGX posted 4QFY17 net earnings of $85.2 million, +10.9% y-o-y and +2.6% q-o-q. This led to full year earnings of $339.7 million, slightly below Bloomberg consensus estimate of $347.3 million.

<hr/><a href="https://www.theedgesingapore.com/reports-fy17-earnings-340-mil-expects-asian-market-activities-return-higher-levels-past-years">See: SGX reports FY17 earnings to $340 mil; expects Asian market activities to return to higher levels of past years</a><hr/>

<span class='see_also_inread'><b>See also: <a class='gtm_see_also_1_inread' style='text-decoration: underline;' href='/capital/brokers-calls/singtel-expected-meet-fy2022-estimates-cgs-cimb?utm_source=website&utm_medium=article&utm_campaign=ONPAGESEO'>Singtel expected to meet FY2022 estimates: CGS-CIMB </a></b></span>

Excluding one-off items, net profits would have been $347.4 million. Its Equity and Fixed Income (EFI) revenue, which accounted for about 51% of total revenue in FY17, was flat for the year although listing revenue was boosted by a record number of bond listings, raising some $384.7 billion.

Derivatives revenue fell 6.8% to $303 million in FY17, largely due to a drop in volume as the number of contracts declined 10%. Market Data and Connectivity bucked the downtrend and posted a 7% rise in revenue for the year.

A final dividend of 13 cents was declared, making full year payout of 28 cents, same as last year.

Management is guiding for FY18 operating expenses of $425 million to $435 million and technology-related capital expenditure of between $60-$65 million.

Update: Shares in SGX closed 5 cents higher at $7.59.

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