Last Update 07 Dec 25

Fair value Increased 1.86%

S68: Equity Market Flows And Execution Will Shape Balanced Returns Ahead

Analysts have modestly raised their fair value estimate for Singapore Exchange to about S$16.74 from S$16.43, reflecting slightly stronger assumptions for revenue growth, profitability, and earnings multiples following recent research that highlights improving equity market flows.

Analyst Commentary

Recent research has highlighted a more balanced outlook for Singapore Exchange, with the latest move seeing the stock upgraded to Neutral from Underweight and the price target lifted to S$16 from S$14. This shift reflects an improved assessment of execution on strategic initiatives to deepen equity market activity, alongside a more constructive view on medium term earnings resilience.

Bullish Takeaways

Bullish analysts point to improving equity market flows as an early sign that initiatives to boost trading volumes and product breadth are starting to translate into tangible revenue growth.
The higher price target of S$16 suggests rising confidence that earnings can compound at a steadier pace, supporting a rerating closer to the updated fair value estimate.
Stronger execution on equity related strategies is seen as enhancing the quality and visibility of fee income, which underpins a more resilient profit profile through market cycles.
The upgrade from Underweight to Neutral indicates that potential downside risk to valuation has narrowed, with a more balanced risk reward skew over the next 12 to 18 months.

Bearish Takeaways

Bearish analysts caution that the Neutral stance, rather than an outright Overweight, signals lingering uncertainty over the durability of improved equity flows in a potentially volatile macro environment.
There are concerns that, while the price target has increased, upside to the current share price may be limited if revenue growth from new initiatives falls short of expectations.
Execution risk remains around expanding higher margin products and sustaining liquidity, which could weigh on operating leverage and restrain further valuation multiple expansion.
Some remain wary that competitive pressures and regulatory changes could cap longer term growth in trading and listing activity, tempering enthusiasm despite the recent upgrade.

What's in the News

SGX Derivatives will launch regulated Bitcoin and Ethereum perpetual futures on 24 November 2025, bringing institutional grade clearing and margining to one of crypto's largest product segments and aiming to capture a share of over USD 187 billion in daily global perpetual volumes (Key Developments).
SGX Indices introduced the CSI SGX Asia 100 and CSI SGX Asia 100 Dividend Focus indices, expanding Asia focused benchmarks and deepening its collaboration with China Securities Index to provide diversified exposure to 100 of the region's largest companies (Key Developments).
SGX Group is rolling out a new trading engine, Iris ST, with planned go live in the latter half of 2027, alongside proposed rule changes including new auction price collars, an extended non cancel auction phase and a new pre trade risk control system to enhance market resilience (Key Developments).
Shareholders approved a final tax exempt dividend of 10.5 cents per share for FY2025, and SGX signalled a steady dividend increase of 0.25 cents every quarter from FY2026 to FY2028, underscoring confidence in cash flow visibility (Key Developments).
SGX launched the Indonesia Singapore Depository Receipt Linkage, allowing investors in Singapore to trade SDRs over key Indonesian names such as Bank Central Asia, Telkom Indonesia and Indofood CBP in Singapore dollars during SGX hours, strengthening ASEAN market connectivity (Key Developments).

Valuation Changes

The fair value estimate has risen slightly to about SGD 16.74 from SGD 16.43, implying a modestly higher assessed intrinsic value for Singapore Exchange shares.
The discount rate has edged up marginally to about 6.97 percent from 6.91 percent, reflecting a slightly higher required return embedded in the valuation model.
The revenue growth assumption has increased slightly to about 5.65 percent from 5.51 percent, indicating a small uplift in expected top line expansion.
The net profit margin has improved modestly to about 49.31 percent from 48.91 percent, signalling a minor upgrade to long term profitability expectations.
The future P/E multiple has risen slightly to about 27.32 times from 27.10 times, suggesting a small increase in the valuation multiple applied to forward earnings.

Expansion into multiple asset classes and innovative products diversifies revenue streams and strengthens SGX's competitive position as a gateway for global investors.
Technology upgrades, regulatory support, and robust pipeline activity boost operating leverage and support sustainable growth in earnings and revenue diversity.
Rising competition, regulatory pressures, and dependence on volatile market conditions threaten SGX's revenue stability, growth prospects, and ability to retain market leadership.

Catalysts

About Singapore Exchange

An investment holding, engages in the operation of integrated securities and derivatives exchange, related clearing houses, and an electricity market in Singapore.What are the underlying business or industry changes driving this perspective?

SGX is benefiting from a pronounced increase in global capital flows and investment activity into Asia, seen in surging equity trading volumes and robust derivatives growth, positioning the exchange as a key regional gateway. This trend is likely to drive sustainable top-line revenue growth and further margin expansion as cross-border participation increases.
The exchange's multi-asset strategy-expanding into FX, commodities, and new innovative products like crypto perpetual futures and tailored index products-reduces its reliance on traditional equities and positions SGX to capture demand from Asia's growing wealth and the diversification needs of global investors, supporting both revenue and EBITDA growth.
Digital product development, technology modernization, and enhancements like the T+1 trading session, proprietary trading workflows, and cross-selling opportunities are strengthening SGX's competitive edge, improving operating leverage, and expected to drive recurring earnings.
Strong momentum in ETF adoption, REITs, and mid-cap trading-supported by regulatory tailwinds and Singapore's reputation as a financial safe haven-underpins higher listing/transaction revenues, and broader investor engagement is likely to further boost earnings and revenue diversity.
The strong IPO pipeline, enabled by regulatory initiatives (such as the equity market review) and global companies seeking Asia-Pacific exposure, sets the stage for a rise in new listings and related fees, providing a forward-looking catalyst for future revenue and net profit growth.

Singapore Exchange Earnings and Revenue Growth

Singapore Exchange Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Singapore Exchange's revenue will grow by 7.2% annually over the next 3 years.
Analysts assume that profit margins will shrink from 49.9% today to 48.6% in 3 years time.
Analysts expect earnings to reach SGD 776.8 million (and earnings per share of SGD 0.72) by about September 2028, up from SGD 648.0 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 26.0x on those 2028 earnings, down from 27.1x today. This future PE is greater than the current PE for the SG Capital Markets industry at 11.6x.
Analysts expect the number of shares outstanding to decline by 0.16% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.96%, as per the Simply Wall St company report.

Singapore Exchange Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The risk of increasing competition from alternative trading venues-including decentralized exchanges and private markets-may divert trading volumes away from SGX, potentially reducing its long-term trading and listing revenues despite efforts to expand its multi-asset offerings.
Heightened competition from larger regional exchanges (such as Hong Kong or Shanghai) or technology-driven global platforms may pressure SGX's market share and fee margins, directly impacting net margins and slowing overall earnings growth.
There is uncertainty about the sustained growth of new equity listings, particularly if the pipeline of large, high-growth regional companies choosing SGX remains limited or slows down after current positive momentum, which could constrain future listing revenue and dampen investor interest over the long term.
Increasing global regulatory scrutiny and potential market fragmentation could escalate compliance and technology costs, while also restricting cross-border trading flows-challenging SGX's ability to maintain its strong revenue and cost discipline as it expands into new asset classes and regions.
Heavy reliance on episodic market conditions for high trading volumes-such as recent volatility or external capital flows-poses a risk if these favorable conditions normalize or reverse, which could lead to volatility in revenue and operating profit margins in future years.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of SGD15.524 for Singapore Exchange based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SGD18.2, and the most bearish reporting a price target of just SGD10.3.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be SGD1.6 billion, earnings will come to SGD776.8 million, and it would be trading on a PE ratio of 26.0x, assuming you use a discount rate of 7.0%.
Given the current share price of SGD16.39, the analyst price target of SGD15.52 is 5.6% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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