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‘Defensive play benefiting from volatility': Analysts positive on SGX earnings, raise target prices
‘Defensive play benefiting from volatility': Analysts positive on SGX earnings, raise target prices

Business Times

time7 days ago

  • Business
  • Business Times

‘Defensive play benefiting from volatility': Analysts positive on SGX earnings, raise target prices

[SINGAPORE] Analysts are positive on Singapore Exchange (SGX), amid the recent months' rise in trading volumes and volatility. SGX can be considered a 'defensive play benefiting from volatility', said CGS International analyst Tay Wee Kuang. 'Given the variety of measures by the government to spur trading volumes alongside volatility amid global macroeconomic uncertainty, we think the current guided revenue growth per annum over FY2025 to FY2027 forward is possible,' he wrote in his Tuesday (Jul 8) note. He has upgraded his rating on the counter to 'add' from 'hold', and raised its target price to S$18.30 from S$13.20. Over the past year, SGX shares have jumped 60 per cent from just under S$6. SGX data indicates that derivatives traded volume rose 17 per cent year on year in the past month to 26.1 million contracts, as its daily average volume (DAV) gained 9 per cent year on year to 1.3 million contracts. As for FY2025 (July 2024 to June 2025), total volume climbed 17 per cent to 315.8 million contracts. Its securities market turnover increased 23 per cent year on year for the month to S$26 billion, while securities daily average value (SDAV) rose 12 per cent year on year to S$1.2 billion. For FY2025, the aforementioned turnover gained 28 per cent to S$336.4 billion, with SDAV up 27 per cent at S$1.3 billion. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up At the group's H1 FY2025 results briefing in February, it had provided the market its medium-term guidance for its financial performance, and guided for 6 to 8 per cent growth per annum for revenue, excluding treasury income. Tay expects the strong volume growth to be a 'good proxy' for SGX's over-the-counter foreign exchange product sales in the second half of FY2025, and estimates net revenue to rise 6 per cent year on year, offsetting seasonally higher operational expenditure. Citibank analyst Tan Yong Hong, also noting the higher trading volumes created by elevated volatility, said he expects 'robust' FY2025 earnings for SGX. He raised the price target for the stock to S$13.10 from S$11.90. However, Citi reiterated its 'sell' rating, saying that market optimism in the review measures is likely to be faced with initial disappointment. The Monetary Authority of Singapore (MAS) announced in February the S$5 billion Equity Market Development Programme to spur the local equities market, and adjustments to the Global Investor Programme. However, Tan stressed that investors are well positioned to gain from the stock. 'We have a valuation at around 25 times its P/E ratio, as compared to the historical 19-to-25 time range, due to MAS review measures in August this year and the bourse's rotation out of Singapore banks,' he wrote. SGX is drawing a few new listings this year, such as that of cloud-based software provider Info-Tech Systems, which closed its first trading day on Jul 4 at S$0.91, around 4.6 per cent above its initial public offering (IPO) price. Automotive group Vin's Holdings made its SGX debut on Apr 15, becoming the first IPO on the bourse in 2025. NTT DC real estate investment trust (Reit) launched its IPO on Jul 7 – the largest in the S-Reit space in ove a decade. It is expected to begin trading at 2 pm on Jul 14. Hong Kong-listed China Medical System is seeking a secondary listing on SGX's mainboard, having slated its listing ceremony for Jul 15. Tay from CGS International warned, however, that interest rate cuts would crimp treasury income, which could be a drag on group revenue for SGX. Tay is also forecasting a year-on-year revenue growth of 4.7 per cent for FY2026, and 5.6 per cent for FY2027. Dividend levels could improve: RHB That said, RHB Group Research analyst Shekhar Jaiswal, who lowered SGX's target price to S$15.90 from S$16, said that the stock's year-to-date gains are likely to have been already priced in, despite the government initiatives announced in February and overall optimism in the market. Jaiswal has kept his 'neutral' call on SGX in his Thursday report, with his earnings forecasts unchanged, though he does raise his dividend expectations on the counter. 'The payout ratio (of SGX) was above 85 per cent in FY2015 to FY2019, above 75 per cent in FY2021 to FY2022, but fell to 69 per cent in FY2020 during the Covid-19 period; it has remained around 61 per cent since,' he said. For FY2025, the RHB analyst expects the payout ratio to stay flat. 'However, with rising cash balances, solid earnings and no major mergers and acquisitions announced, we see room for improvement,' he said. He forecasts the payout ratio to rise gradually to 75 per cent by FY2027. 'But even so, the FY2027 yield would be just 3.4 per cent, still below the market average,' he noted. Citibank's Tan estimates the total potential shareholder return to be under 4 per cent of market value. 'We expect new quarterly dividends per share of S$0.09 (at an approximate annualised 2 per cent yield), with a key risk to our view being share buyback.' SGX is scheduled to announce its FY2025 results on Aug 8, and Jaiswal expects positive updates on dividends. 'Unless SGX prioritises building a cash buffer, we believe it could distribute more to shareholders,' he added.

Broadening bullishness may support interest in new listings, including those headed to Catalist
Broadening bullishness may support interest in new listings, including those headed to Catalist

Business Times

time07-07-2025

  • Business
  • Business Times

Broadening bullishness may support interest in new listings, including those headed to Catalist

[SINGAPORE] The Singapore market seemed unstoppable last week. The Straits Times Index (STI) pushed past 4,000 on Wednesday (Jul 2), and closed above that key threshold for three straight trading days. It ended Friday at 4,013.62 – up 1.2 per cent for the week, and up nearly 6 per cent since the beginning of this year. It was not the largest components of the STI that drove the rise, though. DBS, OCBC, UOB and Singtel – which together account for nearly 60 per cent of the benchmark index – were all up by much less than 1 per cent last week. Instead, property stocks trading at huge discounts to the value of their underlying assets were among the biggest gainers – which seems remarkable given the increased seller's stamp duties on residential properties announced late on Jul 3. Hongkong Land ended last week up nearly 8.6 per cent. UOL Group was up 6.4 per cent. City Developments climbed 4.9 per cent. Other components of the STI that rose significantly last week included DFI Retail Group (up 5.5 per cent), Sembcorp Industries (up 4.5 per cent), Jardine Matheson (up 3.2 per cent), and Singapore Exchange (up nearly 3.1 per cent). BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up What is pushing up the Singapore market? One theory I keep hearing is that the S$5 billion the Monetary Authority of Singapore will soon inject into the local market under its Equity Market Development Programme is fuelling a general sense of optimism. Another view – which this column has previously expressed – is that policy uncertainty and relatively high stock valuations in the United States is driving global capital to markets in Europe and Asia. While the S&P 500 is up 6.8 per cent so far this year, the US Dollar Index has slumped 10.6 per cent. Whatever the case, it might be appropriate for investors to adopt a less defensive posture – by focusing less on big, dividend-paying stocks and taking a chance on companies that have the potential to unlock value and deliver strong growth. On the other hand, corporate boards should perhaps prepare themselves for more scrutiny – especially if their companies' shares do not keep pace with the wider market. Catalist revival? Last week, Info-Tech Systems – the first company to list on the mainboard since 17Live Group in late 2023 – had a reasonably strong debut. The next new listing on the mainboard is likely to be NTT DC Reit, which lodged its preliminary prospectus on Jun 27. With the more bullish market tone, there could well be stronger investor interest in companies headed to the Catalist board too. This, in turn, might spur renewed interest in some of the companies that listed on Catalist over the past couple of years. For instance, commercial interior decorator Attika Group, which listed on Catalist in November last year following a placement at S$0.22 per share, could be viewed as a benchmark of sorts for interior fit-out players Lum Chang Creations and Dezign Format Group, which filed preliminary prospectuses for Catalist listings last month. Attika suffered a slump in profitability in H2 2024 due to difficulties with a corporate office project, but the group still managed to report a 23.7 per cent increase in full-year earnings to S$2.8 million on a 105.9 per cent jump in revenue to S$55.5 million. Separately, the company has said it will venture into the property development and investment field. On Friday, Attika's shares closed at S$0.30 – which puts its market capitalisation at S$40.8 million. Another Catalist company that might shine in a risk-on market is Winking Studios, a game art outsourcing company that is majority owned by Acer. Winking was listed in November 2023, following a placement at S$0.20 per share. For 2024, the company reported an 8.9 per cent rise in revenue to US$31.9 million, and a 70.5 per cent fall in earnings to US$500,000. The weaker profitability belies the group's inorganic growth, though. During the year, Winking acquired a Taipei-based studio called On Point Creative for NT$59.9 million, and Kuala Lumpur-based Pixelline for US$1 million. In January, Winking said it would acquire another game art outsourcing studio called Shanghai Mineloader Digital Technology for 146 million yuan. The group has also been tapping investors. In July, it raised S$27 million through the placement of 108 million shares at S$0.25 each. In November, Winking raised a further £7.9 million through the placement of 52.7 million shares at £0.15 apiece, and obtained a dual listing on the AIM Market of the London Stock Exchange. Winking's shares ended last week at S$0.225, which puts its market capitalisation at S$99.1 million. Then there is Goodwill Entertainment, the operator of the HaveFun chain of karaoke outlets, which listed in November last year after selling shares to investors at S$0.20 each. Goodwill reported a 121.4 per cent increase in revenue to nearly S$53 million for 2024, and a 51.8 per cent rise in earnings to S$4.4 million. It ended 2024 with a net cash position of S$9.9 million. Yet, its shares are now trading at just S$0.163 – which puts its market capitalisation at S$65.2 million, or about 14.8 times its 2024 earnings. Shifting market dynamics In the movie Other People's Money, a corporate raider played by Danny Devito demands that a company he is stalking gets rid of a big loss-making business that is weighing down its stock price. The company refuses, and the president attempts to fob him off by pointing out that he has already made money from his investment. 'You bought the stock at 10. It's now 14,' the president says. Devito's character shoots back: 'The stock is 14 because I'm buying it. I'm doing my part. Now you do yours.' Chronically low stock valuations across the Singapore market over the past decade arguably provided companies with little incentive to improve their profitability or growth prospects. Why bother if it will not immediately translate to higher share prices? The result was generally poor stock returns, investor apathy, and a slump in new listings. If the STI continues rising and bullish sentiment broadens out, however, companies large and small are likely to face more pressure from investors to find ways to unlock value and achieve sustainably higher levels of profitability and growth. Investors entering the market at increasingly elevated levels will want assurance that the companies they own have credible plans to drive shareholder value. Companies that communicate their strategies effectively, and deliver results, are likely to be rewarded with market leading stock valuations.

Structural upside for Singapore equities
Structural upside for Singapore equities

The Star

time05-07-2025

  • Business
  • The Star

Structural upside for Singapore equities

SINGAPORE'S equity market may be on the cusp of a structural uplift, with mid-cap stocks poised to benefit the most from a confluence of supportive domestic policies, resilient earnings prospects and increased investor attention. According to two research houses, UOB Kay Hian (UOBKH) Research and Maybank Investment Bank Research (Maybank IB), there are encouraging signs for Singapore equities in the months ahead, particularly as the Monetary Authority of Singapore (MAS) prepares to roll out a S$5bil Equity Market Development Programme (EQDP) to invigorate market liquidity and institutional participation. Billed as RM9.73 for the 1st month then RM13.90 thereafters. RM12.33/month RM8.63/month Billed as RM103.60 for the 1st year then RM148 thereafters. Free Trial For new subscribers only

Global issues cloud 2H25 IPO outlook
Global issues cloud 2H25 IPO outlook

The Star

time10-06-2025

  • Business
  • The Star

Global issues cloud 2H25 IPO outlook

PETALING JAYA: The initial public offering (IPO) market, which started the year on a subdued note, faces an uncertain second half (2H25) as weak market sentiment, global headwinds and poor earnings season continue to dampen investor appetite. A market watcher says the outlook for IPOs in 2H25 hinges on several unresolved global issues – including the outcome of potential US reciprocal trade tariffs expected in July, US-China trade tensions and the timing of a US interest rate cut, if any. 'The market sentiment isn't good. Last year, about 80% to 85% of IPOs performed well post-listing. 'This year, it's the complete opposite – nearly 80% have traded below their offer prices,' Tradeview Capital chief executive officer and founder Ng Zhu Hann told StarBiz. 'So, what changed? Largely, to me, it is – of course – market fatigue, fund flows, and also because the global situation has made a lot of investors, whether local, institutional, foreign funds or even local retail investors, very risk-averse. 'A lot of people are holding on to their cash rather than participating in the equity market.' Domestically, Ng said a lacklustre corporate earnings season has added to investor caution. To-date, 28 companies have been listed on Bursa Malaysia this year, with Paradigm Real Estate Investment Trust making its debut yesterday. Another three are expected to list by end-June – Ping Edge Technology Bhd (June 13), Cuckoo International (M) Bhd (June 24) and Pan Merchant Bhd (June 26) – bringing the first-half total to 31 IPOs. This puts Bursa Malaysia slightly past the halfway mark of its full-year target of 60 IPOs, but Ng warned that delays and repricings suggest growing caution among potential debutants. 'We've already seen two or three companies pushing back their listings,' said Ng. 'Several IPOs also revised their offer prices downward.' Cuckoo, which was initially scheduled to list on April 30, deferred its debut to June 24 due to 'near-term market challenges'. Its IPO price was also reported to have been revised to RM1.10 per share from RM1.29 previously, although this has yet to be confirmed by the company. Eco-Shop Marketing Bhd, which has since listed, similarly trimmed its IPO price to RM1.13 from RM1.21 before going public. Whether Bursa Malaysia hits its target of 60 listings this year now depends not just on pipeline readiness – but on whether the broader market gives debutants a reason to come forward. Across the shore, Singapore is taking a markedly different approach to reinvigorate its equity market. In February, the Monetary Authority of Singapore or MAS rolled out a bold S$5bil Equity Market Development Programme to boost liquidity on the Singapore Exchange by investing through selected fund managers focused on actively managed strategies targeting local small and mid-cap stocks. This is complemented by tax exemptions on fund manager income 'derived from funds investing substantially in Singapore-listed equities', a narrowed Global Investor Programme to channel more capital into listed equities, and expanded research grants to improve coverage and investor engagement in the equity market.

Liquidity boost for Singapore
Liquidity boost for Singapore

The Star

time06-06-2025

  • Business
  • The Star

Liquidity boost for Singapore

SINGAPORE'S equity market looks set to turn the corner in the second half of the year (2H25), buoyed by a shift in global trade tensions and a timely injection of liquidity from policymakers. For investors seeking value, yield and quality, the city-state is once again looking like a worthwhile bet. The optimism comes as the Monetary Authority of Singapore (MAS) prepares to roll out its S$5bil Equity Market Development Programme (EQDP), aimed squarely at boosting liquidity and breathing life into non-index counters. Billed as RM9.73 for the 1st month then RM13.90 thereafters. RM12.33/month RM8.63/month Billed as RM103.60 for the 1st year then RM148 thereafters. Free Trial For new subscribers only

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