SINGAPORE Exchange (SGX) on Thursday saw its shares hammered after reporting a 20.5 per cent decline in net profit for the second half on the back of lower operating revenue.

 

Net profit for the six months ended June 30, 2021 fell to S$205.6 million, or 19.2 Singapore cents on a per share basis, down from S$258.6 million or 24.2 cents per share in the prior-year period.

 

By 11 am, SGX stock was down S$0.65 or 5.39 per cent to S$11.40.

 

A final quarterly dividend of eight cents per share was proposed, similar to the year earlier. If approved, it brings total dividends in FY2021 to 32 cents, up from 30.5 cents per share last year.

 

The group' s operating revenue fell 6.8 per cent on year during the second half to S$535.1 million, with the decline coming from its equities segment.

 

However, operating revenue for the full year was slightly higher at S$1.06 billion, up 0.3 per cent compared to FY2020. Even so, SGX' s full-year net profit fell 5.6 per cent to S$445.4 million.

 

SGX said underlying business revenue was up 7 per cent, excluding the decline in treasury income, amid a low interest rate environment.

 

SGX chief executive Loh Boon Chye said: " We achieved a strong performance as we invested in growing our business, delivering similar record revenues compared to last year amidst a challenging environment."

 

He added: " Notwithstanding the lower treasury income, our core business segments remained robust, with our fast-growing subsidiaries, Scientific Beta and BidFX, providing an added boost. While the low interest rate environment will continue to impact our treasury income, we believe it will also spur demand for our multi-asset offerings as investors seek enhanced returns."

 

For the full year, SGX' s largest business segment, equities, saw operating revenue decline 7.7 per cent to S$701.1 million.

 

However, operating revenue grew under its Fixed Income, Currencies and Commodities (FICC) and Data, Connectivity and Indices (DCI) segments.

 

FICC revenue rose 23.5 per cent during the year to S$211.8 million, accounting for a fifth of the group' s revenue. Excluding BidFX, a subsidiary acquired in July last year, FICC revenue would be comparable to the prior year, at S$172.1 million.

 

Meanwhile, the DCI segment also saw revenue rise 17.7 per cent to S$143.1 million, making up 14 per cent of the group' s total revenue. Excluding contributions from Scientific Beta, DCI revenue would have been S$108.2 million, similar to FY2020.

 

SGX subsidiaries Scientific Beta and BidFX contributed 7 per cent to the group' s total revenues in FY2021. Last month, the company also announced the acquisition of FX trading platform MaxxTrader. Together with this, SGX said revenue contribution from recently acquired subsidiaries would exceed 9 per cent.

Singapore Exchange (SGX) has reported earnings of $445.4 million for the FY2021 ended June, a decline of 6% y-o-y from $471.8 million previously.

 

Adjusted earnings for the FY2021 came in at $446.9 million, declining 7% y-o-y. This translates to adjusted earnings per share (EPS) of 41.8 cents, compared to 45 cents the year before.

 

Revenue totalled $1.06 billion for the full year, increasing by 0.3% y-o-y from $1.05 billion. Underlying business revenue was up 7% excluding the decline in treasury income, amidst a low interest rate environment.

 

Total expenses for the FY2021 increased 8% to $525.2 million from $486.9 million, largely due to the consolidation of expenses relating to Scientific Beta and BidFX, excluding which total expenses would have decreased 4% to $457.8 million.

 

The board of directors has proposed a final quarterly dividend of 8 cents per share for the 4QFY2021, payable on October 22.

If approved, this would bring the total dividends for FY2021 to 32 cents per share, compared to 30.5 cents per share in FY2020.

FICC revenue &ndash comprising Fixed Income as well as Currencies and Commodities &ndash Derivatives revenues &ndash increased 24% y-o-y to $211.8 million, accounting for 20% of total revenue. 

 

Excluding BidFX which was acquired in July 2020, FICC revenue would be comparable at $172.1 million, compared to $171.4 million the year before.

 

Fixed Income revenue rose by 17% y-o-y to $14.9 million, driven by a boost in listing revenue, which was up 22% y-o-y to $11.5 million. 

 

There were 795 bond listings in the FY2021, with amounts issued of $389.1 billion. In comparison, FY2020 saw 1,032 listings for a total amount of $452.1 billion.

 

Currencies and Commodities &ndash Derivatives revenue increased 24% y-o-y to $196.9 million, accounting for 19% of total revenue. Trading and clearing revenue increased 41% y-o-y to $152.6 million, while Treasury and other revenue fell 13% y-o-y to $44.3 million.

 

Equities revenue &ndash comprising Equities &ndash Cash as well as Equities &ndash Derivatives revenues &ndash declined 8% y-o-y for the FY2021 to $701.1 million, accounting for 66% of total revenue.

 

Equities &ndash Cash revenue increased 3% to $412.7 million. There were 11 new equity listings in FY2021. Total primary and secondary funds raised dipped 5% to $17.9 billion, while daily average traded value (DAV) increased 2% to $1.4 billion. Total traded value increased by 2% to S$340.1 billion (S$332.1 billion).

 

Equities &ndash Derivatives revenue declined 20% to S$288.4 million, with declines across both trading and clearing revenue as well as treasury and other revenue. 

 

Data, Connectivity and Indices (DCI) revenue increased 18% y-o-y to $143.1 million, accounting for 14% of total revenue. 

&ldquo In FY2021, we continued to build, partner and acquire strategically &ndash strengthening our capabilities, products and platforms across asset classes. We achieved a strong performance as we invested in growing our business, delivering similar record revenues compared to last year amidst a challenging environment. Notwithstanding the lower treasury income, our core business segments remained robust, with our fast-growing subsidiaries, Scientific Beta and BidFX, providing an added boost. While the low interest rate environment will continue to impact our treasury income, we believe it will also spur demand for our multi-asset offerings as investors seek enhanced returns,&rdquo says Loh Boon Chye, CEO of SGX.

 

In FY2021, Scientific Beta&rsquo s assets under replication (AUR) exceeded US$60 billion, while BidFX&rsquo s average daily volumes (ADV) increased more than 60% year-on-year to US$43 billion. 

The recent acquisition of MaxxTrader, which is expected to close in 2QFY2022, will lift the combined ADV of SGX&rsquo s FX franchise to more than US$75 billion. Excluding transaction costs, the acquisition of MaxxTrader is expected to be accretive to SGX&rsquo s adjusted earnings from FY2022. 

 

Scientific Beta and BidFX contributed 7% to total group revenues in FY2021. Together with MaxxTrader, total revenue contribution from SGX&rsquo s recently acquired subsidiaries would exceed 9%. 

 

&ldquo We are in a strong position to advance our leadership as a multi-asset exchange, expand our network as a best-in-class partner, and enlarge our support for customers globally with our refreshed pan-Asia product shelf and stronger international presence. We are also focused on executing our recent FICC investments and partnerships, such as TrumidXT, Marketnode, Climate Impact X and our upcoming FX Electronic Communication Network (ECN). As a group, we are now well poised to help our customers capture the growth opportunities in Asia and capitalise on trends such as passive investing, digitalisation and sustainability,&rdquo added Loh.