Mixed outlook for SGX despite expected strong H1 growth

SGX’s operating revenue will climb by 14.6% in H1.

Singapore Exchange (SGX) is expected to report strong year-on-year growth in its first-half financial year 2025 however analysts remain cautious due to weaker-than-expected December 2024 data and limited upside potential for the stock, RHB analyst Shekhar Jaiswal said.

SGX will report its H1 2025 results on 6 February before the market opens.

SGX’s operating revenue for H1 2025 is projected to reach $679m, a 14.6% increase from the same period last year, whilst Profit After Tax and Minority Interests (PATMI) is estimated at $323mn, up 14.7% year-on-year. The growth was driven by a 34% rise in securities turnover and a 21% increase in derivatives trading volume, underscoring strong market activity amidst global volatility.

In December 2024, SGX reported a securities turnover of $20b, up 5% from the previous year, whilst derivatives volumes rose 10% to 23.2 million contracts. Retail participation in the cash market hit a two-year high.

However, both metrics declined on a month-on-month basis, with December’s results falling short of estimates by 2%, dampening expectations for the second half of the financial year.

According to Jaiswal, SGX is expected to declare an interim dividend of $17.5c per share. However, its forward dividend yield of 3% remains below the broader market average of 5.2%, making it less attractive to income-focused investors. The exchange’s valuation, trading near its historical average forward price-to-earnings ratio, also limits prospects for significant price appreciation.

Market volatility, fueled by global policy measures such as U.S. interest rate cuts and economic reforms in China, is expected to sustain trading activity. Still, analysts predict a moderation in growth rates for the remainder of FY2025.