Dividend Yields - Click HERE
 

Get up to 2 Years of free subscription by inviting your friends to KALKINE!

For every friend of yours who joins KALKINE, we'll give you 3 months of free subscription (up to a limit of 24 months free subscription). If you recommend 3 friends and they join within a month of you referring them, you get 1 year free subscription to KALKINE reports added to your account (up to a limit of 24 months free subscription). Simply reply to this email with their name, e-mail and phone number.
 

Stock Of The Day - ASX LIMITED (EXPENSIVE)

Quite recently, ASX Limited (ASX) posted its earnings for nine months ending at March quarter 2015, reporting an operating revenues of $516.8 million, an increase of 5.8%, as compared to $488.4 million for the same period of last year. As per the revenues by segment, Listings and Issuer Services rose 10.6% year on year to $125.7 million, from $113.6 million. Cash Market revenues surged 6.0% to $93.1 million, boosted by the trading and clearing segments which soared 7.1% and 7.7% respectively. Information Services, Technical Services and Austraclear segments increased 5.5%, 8.8% and 9.8% respectively in year over year terms. However, despite reducing fee, Derivatives and OTC Markets posted a marginal rise of 1%, as compared to the year to date of March in 2014.This impact is partly attributed to the decrease in Equity options daily average contracts by 1.7% to 491,491, as compared to 499,780 for the same period of last year.



ASX revenues share and breakup by Segment (Source: Company Reports)

During the nine months ending at March, the total capital raised reached to $50.2 billion through 92 Initial Public offerings, surging 13% in the year over year terms, while the total cash equities average daily trade value in the exchange rose 11.6% to $3.7 billion.  With regards to the Derivatives segment, total average daily futures contracts and options contracts traded on the exchange soared 3.7% and 1.7% to 418,818 and 491,491 respectively, as compared to the last quarter. ASX’s IPO’s have been increasing since few years driven by several technology companies’ listings. Last year, the exchange new capital surged over 179% to $127.7 billion. For the year to date of March 2015, out of 126 entities, 25 were technology listings (including IPO and backdoor listings).


Activity levels as of YTD March 2015(Source: Company Reports)

As per the Operating expenses, increase in staff costs lead to the rise in the expenses by 4.6% in year over year terms. Staff costs grew 5.7% due to higher salaries and decrease in staff capitalization. Meanwhile, the average headcount decreased by 1.6% to 526 full time employees. The exchange maintains its total fiscal year guidance of over 4% expanse increase. A one-time restructuring charge of over $7 million pre-tax is expected to be incurred during the second half of 2015.


From 2011, the exchange has been spending an average of $41 million per annum of capital expenditure and expects the same to be in the range of $40 million to $45 million for entire fiscal year of 2015. For the nine months of the fiscal year 2015, the exchange incurred a capital expenditure of $26.0 million.



Capital Expenditure (Source: Company Reports)

To keep up with the global standards and offer the best platforms to traders, the exchange has been investing on Australia’s financial market infrastructure under two phases. This program by the exchange boosts of offering global standards with fast connectivity and excellent customer experience. In April, ASX opened its 24-hour Customer Support Centre, which has ASX’s operations, market surveillance as well as technology teams together. The development of Phase I is expected to cost over $35 million.
World Class Infrastructure development phases



Infrastructure Development (Source: Company Reports)

Meanwhile, ASX has also decreased fee for electricity and interest rate futures products, during the first half of fiscal year 2015, in an effort to boost volumes. This effect was shown on the revenues of the Derivatives and OTC Markets business which generated $12.8 million due to reduction of fee in year to date of March 2015. The exchange wants to build a more sustainable business in the current competitive environment and expects to generate over $19 million through the fee reduction impact for the full fiscal year of 2015. The exchange incurred a total cost of $38 million per annum under the new fee schedule for single clearing facilities.


Revenue Movement Futures and Derivatives OTC Notional value cleared (Source: Company Reports)

The exchange received ESMA recognition and has AA- long-term credit rating from S&P. ASX boosts of having the most efficient market model in Australia offering several facilities with positive client engagement. 


ASX Daily Chart (Source - Thomson Reuters)

Market activity remains volatile and in addition to softness in derivative revenues we expect a cooling in new and secondary listings in the fourth quarter, with April 2015 capital raised down 37% on a strong prior period. ASX expects the full-year impact on revenue from the fee reductions on its electricity and interest rate futures products to be around AUD 19 million. While higher than previously estimated, this is due to volume growth. We believe at the current price the stock isexpensive.