1HFY21 adjusted net profit ahead of expectations
1HFY21 adjusted net profit of S$228m improved +7% y-o-y. Net profit was driven by strong revenue growth (S$521m, +9% y-o-y). SGX saw strong revenue growth which continues to be driven by volatility in global markets and increased participation from customers. Adjusted net profit of S$228m improved +7% y-o-y, as SGX also saw increased adjusted expenses of S$242m (+9% y-o-y) due to higher staff costs from newly acquired Scientific Beta and BidFX.
Strong performance across asset classes. Cash equities trading and clearing revenue improved 23% y-o-y to S$111m as total traded value increased 19% y-o-y with higher average clearing fees of 2.71bps. Derivatives revenues came off from a high momentum in the previous half, as 36% y-o-y improvement in currencies and commodities derivatives revenues to S$71m was partially offset by 5% y-o-y decline in equities derivatives trading revenue to S$110m, due to 15% q-o-q decline in average fee per contract arising from offering of an introductory fee to the new SGX FTSE Asian exnapsion suite during the last quarter and lower treasury income on lower interest rates. DCI revenues improved 35% y-o-y to S$71m, in part due to
Scientific Beta and BidFX’s S$34m contribution post acquisition.
Smooth FTSE Taiwan offering. SGX launched the FTSE Taiwan contract in July 2020 to replace MSCI Taiwan contract and was focused on migrating volumes from MSCI Taiwan. C.90-95% volumes have since moved to FTSE Taiwan contracts and SGX has decided to suspend trading of the MSCI Taiwan contract on 1 Nov 2020, ahead of the expiry in Feb 2021. Open interest and volume market share of the contracts remain >80% and >90% respectively and SGX continues to expect the average fee per contract post the offering of introductory fee to improve as the FTSE contracts run-in subsequent quarters.
New products and other updates. SGX looks towards introducing more products, including the launch of its first four ESG Index futures contract in end January. Scientic Beta also continues to develop sustainability solutions for its customers and leverage on SGX’s network to cross-sell. Further, SGX has invested a 10% stake to set up a digital exchange with DBS, and newly partnered Temasek Holdings to build a digital asset infrastructure for capital markets workflows.
Interim Income Statement (S$m)
|FY Jun||1H2020||1H2021||+/- y-o-y|
|Cost of Goods Sold||(224)||(248)||11%|
|Other Oper. (Exp)/Inc||0.0||0.0|
|Other Non Opg (Exp)/Inc||6||15.6||160%|
|Associates & JV Inc||(1.0)||(0.6)||-40%|
|Net profit bef Except.||214||228||7%|
|Opg Profit Margins (%)||53.1||52.3|
|Net Profit Margins (%)||44.6||46.1|
|Sec ave daily trading volume (bn)||1,174||1,745||49%|
|Sec ave daily trading value ($bn)||1,062||1,264||19%|
|Derivatives ave daily trading volume (m)||0.905||0.932||3%|
|Open interest (m)||5.783||4.344||-25%|