The futures trading volume has also shown resilience, with trading volume of 4.60m for Apr 09, close to Mar 09's 4.84m. This is sharply higher than the monthly average of 3.47m for the first two months of CY2009. Separately, SGX announced yesterday the launching of a Fuel Oil Futures contract in 2HCY09, which is a positive. However, we are assuming minimal impact in the initial quarters.
We have raised our assumptions of stockmarket turnover, given the recent strength. Our FY09 stockmarket ADT forecast has been raised from S$1.10b to S$1.26b ? this assumes 4QFY09 ADT of S$1.70b, versus 3QFY09's S$0.98b. Though we expect turnover to soften from the high May 09 levels, we believe FY10 ADT will be stronger than our earlier assumptions. Hence, we raise our FY10 stockmarket ADT from S$1.24b to S$1.36b.
Target price raised, but SELL call remains. Correspondingly, we raised our FY09 and FY10 net profit forecasts both by 7% to S$296m and S$332m respectively. As the likelihood of FY10 ADT being greater than FY09 is now much higher, we raise our P/E multiple to 20x, from our previous 13x assumption. This is close to the average 21x that SGX traded at over the past 3.5 years. Hence, based on 20x FY10 P/E, our revised SGX target price is S$6.20 (versus our previous S$3.95). SGX remains a SELL.
Our sensitivity analysis shows that SGX target price would be S$7.10 if FY10 ADT hits S$1.71b, or S$7.90 if ADT is S$2.05b. If one feels that these are more reasonable assumptions, then they can trade on SGX. However, we are not so optimistic.
Click here for more Banks and Financial Institutes Technical Analysis
Sponsored Links
Comments
No response to “SGX: Recent strength in stockmarket turnover, but valuation is rich”
Post Comments (Atom)
Post a Comment |
Post a Comment