Singapore Exchange Ltd: Robust Growth, Dividend Upside, and Sector Analysis – August 2025 Equity Review
Broker: OCBC Investment Research Private Limited
Date of Report: 11 August 2025
Singapore Exchange Ltd: Strong Core Growth and Dividend Upside Amid Market Reforms
Overview: Singapore Exchange’s Multi-Asset Strategy Drives Results
Singapore Exchange Ltd (SGX) continues to reinforce its position as a leading multi-asset marketplace in Asia, offering comprehensive listing, trading, clearing, settlement, depository, data, and index services. SGX has become a preferred venue for Asian equity derivatives and holds a global leadership position in iron ore derivatives. The company’s robust financial results for FY25 highlight the success of its strategic initiatives and its commitment to shareholder returns.
FY25 Financial Performance: Double-Digit Growth Despite Consensus Miss
- Core PATMI: 15.9% year-on-year rise to SGD609.5 million, though 4.8% below consensus forecasts.
- Net Revenue: Up 11.7% YoY, reaching SGD1,298.2 million.
- Total Dividends: 37.5 Singapore cents per share, an 8.7% increase from FY24.
- Final Quarterly DPS: Declared at 10.5 Singapore cents.
- Expenses: Adjusted expenses rose just 1.6%, supporting strong margin expansion.
Dividend Outlook: Quarterly Increases and Strong Balance Sheet Support
- SGX announced guidance to raise its dividend per share (DPS) by 0.25 Singapore cents every quarter from FY26 to FY28, subject to earnings growth.
- Projected DPS for upcoming years:
- FY26: 44.5 Singapore cents
- FY27: 48.5 Singapore cents
- FY28: 52.5 Singapore cents
- Management emphasizes total shareholder returns over traditional payout ratios.
- CAPEX Guidance: SGD90-95 million in FY26, with expenses expected to grow 4-6%.
Growth Roadmap: Medium-Term Targets and Strategic Initiatives
- SGX is targeting a 6-8% compound annual growth rate (CAGR) in revenues (excluding treasury income) over the medium term.
- Key initiatives include:
- Enhancing OTC FX and derivatives, with OTC FX expected to contribute a mid-to-high single-digit percentage to group EBITDA.
- Accelerating stock market momentum via the Equity Market Development Programme (EQDP).
- Expanding IPO activity, deepening product coverage, and growing the equities ecosystem.
- Leveraging technology and data analytics to improve operational efficiency.
- Pursuing bolt-on acquisitions to drive value accretion.
- SGX’s IPO pipeline currently includes over 30 companies actively working on listings.
Valuation Update: Premium Multiples Reflecting Sector Leadership
- Fair value estimate increased from SGD14.78 to SGD16.15, reflecting optimism from ongoing market reforms and platform enhancements.
- Applied a higher target P/E multiple of 26.2x, two standard deviations above SGX’s 5-year average forward P/E, with an ESG premium.
ESG Performance: Sustainability and Governance Excellence
- SGX has maintained a strong ESG rating for at least four years, scoring highly on environmental and governance pillars.
- 100% of revenue derived from less carbon-intensive business lines.
- Strong management practices addressing carbon emissions, with clear reduction targets.
- Governance strengths include an independent majority board, separated CEO/Chairman roles, and robust ethics policies.
- Three-year average staff turnover rate (FY21-FY23) is in line with industry norms.
Key Financial Summary Table
| SGD million |
FY25 |
FY26E |
FY27E |
| Revenue |
1,371 |
1,431 |
1,489 |
| PATMI |
648.0 |
660.2 |
695.4 |
| Core PATMI |
609.5 |
660.2 |
695.4 |
| Core EPS (SGD) |
0.57 |
0.62 |
0.65 |
| DPS (SGD) |
0.375 |
0.445 |
0.485 |
Key Ratios
|
FY25 |
FY26E |
FY27E |
| P/E (x) |
28.1 |
26.0 |
24.7 |
| P/B (x) |
7.8 |
7.2 |
6.7 |
| Dividend Yield (%) |
2.3 |
2.8 |
3.0 |
| Net Gearing (%) |
-23.0 |
-21.5 |
-21.2 |
Peer Comparison: Major Exchanges in Asia-Pacific
| Company |
P/E (FY26E) |
P/E (FY27E) |
P/B (FY26E) |
P/B (FY27E) |
EV/EBITDA (FY26E) |
EV/EBITDA (FY27E) |
Dividend Yield (FY26E) |
Dividend Yield (FY27E) |
ROE (FY26E) |
ROE (FY27E) |
| Singapore Exchange Ltd (SGXL.SI) |
26.1 |
24.7 |
7.2 |
6.6 |
19.0 |
18.1 |
2.6 |
2.8 |
29.0 |
27.7 |
| Hong Kong Exchanges and Clearing Ltd (0388.HK) |
35.7 |
34.5 |
9.9 |
9.6 |
15.0 |
14.6 |
2.5 |
2.6 |
27.8 |
27.6 |
| ASX Ltd (ASX.AX) |
24.5 |
24.8 |
3.3 |
3.2 |
0.1 |
0.1 |
3.5 |
3.4 |
13.5 |
13.2 |
| Bursa Malaysia Bhd (BMYS.KL) |
22.6 |
21.6 |
7.0 |
6.8 |
8.7 |
8.4 |
4.1 |
4.3 |
30.8 |
31.9 |
| Japan Exchange Group Inc (8697.T) |
26.0 |
25.0 |
4.5 |
4.2 |
13.3 |
12.9 |
2.7 |
2.7 |
17.7 |
17.8 |
Business Segment Breakdown: FY25 Operating Revenue & Profit
| Segment |
Revenue (%) |
Operating Profit (%) |
| Fixed Income, Currencies, Commodities |
25.5 |
18.9 |
| Equities – Cash |
28.9 |
32.8 |
| Equities – Derivatives |
27.4 |
32.6 |
| Platform and Others |
18.1 |
15.6 |
Historical Performance: Core PATMI and Dividend Trends
| Financial Year |
Core PATMI (SGD m) |
Dividend Per Share (S cents) |
| FY18 |
363 |
30.0 |
| FY19 |
393 |
30.0 |
| FY20 |
472 |
30.5 |
| FY21 |
445 |
32.0 |
| FY22 |
456 |
32.0 |
| FY23 |
503 |
32.5 |
| FY24 |
526 |
34.5 |
| FY25 |
610 |
37.5 |
Company Financials: Income Statement and Ratios
| Year Ending 30 June |
2021 |
2022 |
2023 |
2024 |
2025 |
| Revenue (SGD m) |
1,056.0 |
1,099.0 |
1,194.4 |
1,231.7 |
1,370.6 |
| Operating Expenses (SGD m) |
527.3 |
556.3 |
614.8 |
628.5 |
549.1 |
| Operating Income (SGD m) |
528.7 |
542.7 |
579.6 |
603.1 |
749.1 |
| Net Income (SGD m) |
445.4 |
451.4 |
570.9 |
597.9 |
648.0 |
| Core EPS (SGD) |
0.4 |
0.4 |
0.5 |
0.6 |
0.6 |
| Return on Equity (%) |
33.87 |
30.82 |
35.18 |
32.67 |
31.15 |
| Operating Margin (%) |
50.06 |
49.38 |
48.53 |
48.97 |
54.65 |
| Net Income Margin (%) |
42.18 |
41.07 |
47.80 |
48.54 |
47.28 |
| Effective Tax Rate (%) |
16.91 |
17.02 |
15.32 |
15.72 |
17.53 |
| Dividend Payout Ratio (%) |
77.96 |
78.31 |
62.94 |
63.26 |
– |
| Net Debt/EBIT |
-0.63 |
-0.52 |
-0.58 |
-0.67 |
-1.10 |
Potential Catalysts and Risks
- Catalysts:
- Stronger-than-expected revenue from expanded product offerings.
- Synergies from bolt-on acquisitions, product innovation, and alliances increasing trading flows.
- Tighter cost controls and higher-than-expected dividends/trading velocity.
- Risks:
- Weaker trading volumes due to reduced risk appetite or market liquidity.
- Rising regional competition, cost inflation, fee pressures, and potential market share loss.
- Mergers & acquisitions and integration risks.
- Possible trading disruptions and technology issues.
- Higher compliance and regulatory costs, especially relating to China FTSE A50 and competing MSCI contracts.
Company Profile: SGX’s Global Ambitions and Sustainability Leadership
SGX Group strives to be the world’s most trusted, efficient international marketplace, covering equity, fixed income, currency, and commodity markets to top regulatory standards. Through its SGX FIRST sustainability platform, the exchange is leading climate action and transition financing. With its headquarters in AAA-rated Singapore, SGX is globally recognized for risk management and clearing capabilities.
Conclusion: Singapore Exchange Positioned for Sustainable Growth
SGX’s FY25 results underscore its multi-asset strategic strength and leadership in the region, supported by a strong balance sheet and proactive dividend policy. With a clear roadmap for ongoing market reforms, product innovation, and sustainability, SGX is well-positioned to deliver attractive returns to shareholders and remain competitive among leading global exchanges.
