SGX (Lim&Tan)

S$7.58-SGXL.SI

􀁺 Volume hit the year’s low in June, totaling only $27.76 bln, almost a quarter lower than the year’s most active month in January.

􀁺 On a y-o-y basis, June’s volume was 7% higher.

􀁺 This took the total for the June quarter (SGX’s Q4) to $88.05 bln, which is:

a. 15% lower than the preceding quarter’s $104.1 bln, which netted the exchange $77.34 mln underlying profit (ie not taking into account the $12 mln expenses relating to the failed takeover of ASX); and

b. 8.8% below year ago’s $96.6 bln and which netted $79.63 mln underlying profit, (before exceptionals like $5 mln write-back and $2.72 mln goodwill impairment).

􀁺 We maintain SGX be unlikely to raise the variable dividend for ye Jun ’11, ie 12 cents for the third consecutive fiscal year. (Underlying profit has been stuck in the $70-80 mln for 6 consecutive quarters.)

􀁺 Together with the base rate of 4 cents a share, total of 28 cents translates to 3.7% yield. This is insufficient to justify an upgrade from our Neutral call.

􀁺 At $7.58, the stock is up 7% since hitting the year’s low of $7.09 two Mondays ago, and 2.3% since the announcement of whole-day trading last Thursday morning.