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SGX Stock Recommendation - Singapore Exchange Ltd
DBS Vickers upgraded Singapore Exchange Ltd (SGX) to 'hold' from 'fully valued' and raised its target price to S$7.25 from S$5.40, citing a gradual pick-up in the bourse's volumes and values.
SGX shares were down 0.3 percent at S$6.96 on Wednesday. The stock has advanced 13.5 percent so far this year versus the 16 percent gain in the broader Straits Times Index.
DBS increased its securities average daily trading volumes estimate to 1.68 billion from 1.57 billion, and average daily trading values forecast to S$1.43 billion ($1.16 billion) from S$1.34 billion.
"Current valuations are not enticingly attractive but we believe downside should be limited and supported by decent dividend yields of 4-5 percent," DBS said. It raised its 2013-2014 fiscal year earnings estimates by 4 percent each.
SGX is slated to report its earnings for the first quarter of 2013 fiscal year on October 18. DBS expects SGX to report net profit of S$78 million on the back of S$172 million revenues and S$74 million expenses for the quarter.
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