SGX share price: Why DBS, Maybank and RHB raised their targets

• Singapore Exchange’s (SGX: S68) share price is down some 0.8% this week
• This is despite the launch of four new ESG index contracts on Monday (25 January 2021)
• Last Friday (22 January), the bourse operator saw H1 profits beat market estimates
• SGX also announced a new digital asset joint venture (JV) with Temasek Holdings
• DBS, RHB and Maybank raised their target prices on SGX following the announcements
• Trade SGX, long or short, via an IG account today

SGX share price: what’s the latest?

Singapore Exchange’s (SGX) share price is down as much as 0.8% so far this week, despite the launch of four new environmental, social and governance (ESG) derivatives on Monday (25 January 2021).

As at 15:55 SGT on Tuesday (26 January 2021), SGX shares are being exchanged at S$10.02 each.

The new contracts, co-developed with FTSE Russell, are designed to give investors access to a wider range of sustainable, ESG-centric products and solutions, as part of the SGX FIRST (Future in Reshaping Sustainability Together) initiative.

The four indices are: SGX FTSE Emerging ESG Index Futures, SGX FTSE Emerging Asia ESG Index Futures, SGX FTSE Asia ex Japan ESG Index Futures and SGX FTSE Blossom Japan Index Futures.

Higher half-yearly profits and new Temasek JV

SGX’s current share price softness is also despite the fact that it posted higher-than-expected half-yearly profits last Friday (22 January 2021).

The bourse operator reported an adjusted net profit of S$228 million for the first half of its 2021 financial year, up 12.4% from S$213.9 million a year ago.

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) stood at S$321.2 million, up 7.5% from S$298.8 million in the first half of 2020.

In light of the performance, the board of directors declared an interim quarterly dividend of S$0.08 a share, up from S$0.075 in H1 2020. This brings the stock’s total dividends in the first half of 2021 to S$0.16, as compared to S$0.15 per share in H1 2020.

SGX also announced on the same day that it has entered into a JV with Temasek Holdings in a bid to form Asia Pacific’s ‘first exchange-led digital asset venture focused on capital markets workflows through smart contracts, ledger and tokenisation technologies’.

Where next for SGX shares?

Following SGX’s latest financial results and Temasek JV announcement, analysts lifted their target prices while keeping ratings unchanged.

DBS raised their target price to S$10.20 from S$8.40, citing that SGX’s valuations are ‘getting rich’. The research team also reiterated a ‘hold’ rating on the stock, while increasing 2021-22 earnings forecast by 1% to 3% on higher revenue assumptions.

Meanwhile, RHB and Maybank analysts also kept their ‘buy’ stock ratings.

RHB revised its target price on SGX higher to S$11.60 from S$10.30, while Maybank raised its estimate to S$11.48 from S$10.77.

RHB brokers say they expect equity and derivative markets to be boosted thanks to a global economic recovery and ongoing portfolio risk management.

The firm thus raised its 2021-22 earnings predictions by 4% to 9% in the hopes of higher securities daily average values.

Over at Maybank, analyst Thilan Wickramasinghe wrote that ‘higher contract pricing, strong equity market velocity and new product launches should continue to support earnings momentum and keep dividend visibility high’.

He also noted that the integration of BidFX and Scientific Beta contributed 6% of revenues in the first half of 2021.

‘Strengthening demand for fixed income listings together with new product launches – especially in the ESG space – should continue to drive growth going forward, we believe’, he added.

How to trade SGX with IG

Are you feeling bullish or bearish on Singapore Exchange’s stocks?

Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

1. Create a live or demo IG Trading Account, or log in to your existing account
2. Enter <Singapore Exchange Ltd> in the search bar and select the instrument
3. Choose your position size
4. Click on ‘buy’ or ‘sell’ in the deal ticket
5. Confirm the trade