CGS-CIMB analyst Wee Kuang Tay upgraded the rating on Singapore Exchange to a Buy yesterday, setting a price target of S$18.30.
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Wee Kuang Tay has given his Buy rating due to a combination of factors including strong trading volumes and increased demand for OTC FX products, which are expected to drive Singapore Exchange’s (SGX) financial performance. The anticipated core profit after tax and minority interest (PATMI) for the second half of fiscal year 2025 is projected to rise by 17% year-over-year, supported by a 6% increase in net revenue, which offsets higher operational expenses.
Additionally, the Monetary Authority of Singapore’s (MAS) S$5 billion Equity Development Program (EQDP) is expected to enhance liquidity and stimulate trading volumes in the coming fiscal years. The potential for increased listings and government measures to boost trading activity further supports the positive outlook. The valuation has been upgraded with a target price of S$18.30, reflecting confidence in SGX’s defensive nature and expected earnings growth, despite potential risks such as lower trading volumes and declining treasury income from interest rate cuts.