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Thursday, August 23, 2012

Nomura cuts SGX’s target price to $7.60, maintained neutral rating


Nomura cut its target price on Singapore Exchange (SGX) to $7.60 from $9.40 and maintained its ’neutral’rating, saying that the bourse operator’s sluggish revenue momentum is expected to continue.

SGX shares were unchanged on Thursday morning. The stock has risen 13.5 per cent so far this year versus a 16% gain in the broader Straits Times Index.
Nomura said the drop in its target price was mainly to reflect lower expectations for SGX’s securities average daily value traded (DVT) to $1.3 billion from $2.0 billion. It added that DVT will have to recover above $1.5 billion to support a re-rating.

But SGX is diversifying its revenue base in terms of products and geographies, Nomura said, adding that potential tie-ups with other bourses could generate upside to revenue.

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