RHB Bank Singapore's Shekhar Jaiswal has raised his target price for the Singapore Exchange Group from $11.60 to $12.80, citing heftier trading volumes of its various products that "continues to surprise on the upside."
Most recently, the exchange's latest monthly data for October has shown that turnover reached $26.9 billion and securities daily average traded value (SDAV) hit $1.22 billion, both of which were up 36% y-o-y.
"Higher near-term market volatility, amidst the US election outcome, should keep derivative volumes elevated," says Jaiswal in his Nov 20 note, where he has kept his "neutral" call on this counter.
"We see markets changing expectations of slower interest rate cuts as positive for corporate earnings here, which are heavily weighted towards banks.
"We believe this raises investor interest in domestic equities and keep the securities turnover elevated," he adds.
Jaiswal estimates that SGX's yield remains "unexciting" at just 3%.
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Nonetheless, he has increased his projections for SGX's FY2025 earnings by 7.5%, and for the subsequent FY2026 and FY2027 by 5.1% and 5% respectively and by applying the same 21x multiple, deriving the higher target price of $12.80.
Similarly, OCBC Investment Research has kept its "hold" call but with a higher fair value of $12.21 - up from $10.76, given the exchange's continued solid business momentum, which will result in improved economies of scale.
OCBC, in its Nov 20 note, increased its FY2025 earnings estimate for SGX by 3.3% to 53 cents per share.
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It has also raised its valuation multiple from 20.9x earnings to 23x earnings.
SGX shares changed hands at $12.36 as at 9.25 am, up 1.73% thus far today, and up 26.35% year to date.
