RHB raises target price for Singapore Exchange

Securities trading remains weak.

RHB has raised its target price and earnings forecast for the Singapore Exchange as derivatives volume meets expectations.

In a note on Monday, RHB analyst Shekhar Jaiswal has set a $10 target price for SGX, up 6% from $9.60 previously after derivatives volume continued to meet estimates. 

Jaiswal noted that SGX exceeded estimates so far this year with both year-to-date derivatives volume and derivatives daily average volume (DDAV) rising 5% and 4% year-on-year, respectively.

He also raised their earnings forecast for the financial year 2024 by 2% and their projected earnings for FY2025-2026 by 3-5%.

READ MORE: SGX derivatives trade volume climbs 24% in February

Despite higher-than-expected results, RHB noted that SGX’s “valuation and dividends are still unexciting.” 

“The stock is currently trading a tad below its historical average P/E, but we see limited upside,” said Jaiswal.

Meanwhile, RHB said Singapore remained the second most actively traded equities market in Southeast Asia in February with $1.25b in securities daily average value (SDAV) that month, up 13% year-on-year and 34% higher from the month before. 

The total securities turnover value also rose 13% from a year ago to $25b.

So far this year, securities turnover value and SDAV were still down 8% and 10% year-on-year, respectively, prompting the analyst to also slash their SDAV estimate by 12% for FY2024.