Stock Name: SGX
Company Name: SINGAPORE EXCHANGE LIMITED
Research House: CIMB
Notes downgrade, lower target price at $8.26 from $10.86 stems from “big problems” of use of shares, premium pricing for ASX. “This creates an arbitrage gap. In the next six months, we expect the gap between SGX and ASX to weigh on SGX's share price.”
Company Name: SINGAPORE EXCHANGE LIMITED
Research House: CIMB
CIMB downgrades Singapore Exchange (S68.SG) to Trading Sell from Outperform. Says ASX (ASX.AU) deal makes much strategic sense, would propel joint entity into “league of leading exchanges in the world”, should be EPS-enhancing as it utilises debt, with share dilution from equity portion of transaction lower than EPS enhancement.
Notes downgrade, lower target price at $8.26 from $10.86 stems from “big problems” of use of shares, premium pricing for ASX. “This creates an arbitrage gap. In the next six months, we expect the gap between SGX and ASX to weigh on SGX's share price.”
Adds as each deal milestone reached, arbitrage gap with ASX should narrow; says offer generous “and we do not expect the deal to be scuppered. For the same reason, it now makes more sense to gain exposure to SGX, via ASX.” SGX last down 2.1% at $8.76.
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