SGX - DBS, OCBC raise target price for SGX

Stock Name: SGX
Company Name: SINGAPORE EXCHANGE LIMITED
Research House: DBS Vickers

DBS Vickers has raised its target price for Singapore Exchange <SGXL.SI>, Asia’s second largest listed bourse, to S$11.40 from $9.60 and maintained its “buy” rating. 



OCBC Investment Research has downgraded its rating to “sell” from “hold” on valuation grounds, but raised its target price to $8.60 from $8.35. 

     

STATEMENTS: 

DBS said SGX’s first quarter earnings were within expectations as market activity picked up only in September and did not offset the weakness in the July-August period. 

SGX said net profit for the fiscal first quarter ended Sept 30 fell 21% to $74.2 million from $94.1 million a year ago, hurt by weak trading volumes in July and August and higher technology-related costs.

However, DBS expects further acceleration in SGX’s market activity in its second and third quarters due to positive market momentum, coupled with the listing of American Depositary Receipts and other initiatives. 

The brokerage also upgraded its earnings estimates by 6-7% after lifting volume and value assumptions for SGX’s 2011-2013 financial years. 

OCBC said it has retained its $362.9 million profit estimates for SGX’s 2011 financial year, taking into account its projection of a better second quarter. 

According to Thomson Reuters’ I/B/E/S estimates, SGX’s 2011 financial year net profit is expected to be $379 million. 

However, the brokerage said valuations for SGX and its regional peers have risen and are now close to almost previous peak valuations, which went as high as 35 times earnings. 

“We are reluctant to accord such high valuations which were then partly fuelled by merger talks,” OCBC said in a report. 

At 0228 GMT, SGX shares were down 0.9% at $9.95 on a volume of 2.1 million shares.