ASX Limited (ASX: ASX)

ASX was incorporated in 1987, provides securities and derivatives exchange and ancillary services. Its market capitalization stood at AUD 16.58 billion as of 3rd November 2021.

Financial and Operational Updates: As per the Monthly Activity Report for September 2021, ASX witnessed a total capital raise of ~AUD 10.7 billion using the platform, an increase of 35% over PcP. As per the Annual Report for FY21 released on 29^th September 2021, the operating revenue rose by ~1.4% and was reported as ~AUD 951.5 million for FY21 as against PcP. Its underlying profit after tax declined by ~6.4% to ~AUD 480.9 million in FY21 versus PcP. ASX declared a full-year dividend of AU 223.6 cents in FY21, down by ~6.4% from last year.

Technical Analysis: On a daily chart, ASX price witnessed a steep rally from the low of AUD 78.53 to a high of AUD 88.49 tested on November 03, 2021. Currently, prices are sustaining below the horizontal trend line resistance level at AUD 89.50 and facing the resistance of the same. Moreover, the momentum oscillator RSI (14-period) is trading in an overbought zone at (~73.86 level), which might indicate the possibility of a downside correction from the higher levels.

The stock has given ~10.55% return in the past three months and ~20.96% in the past six months. On a TTM basis, the stock is trading at a price-to-book value multiple of 4.4x, higher than Financials Industry average of 3.2x, implying overvaluation. After considering its RSI trading in overbought zone, we consider it is prudent to liquidate the stock. Hence, we recommend a “Sell” rating on the stock at the current price of AUD 88.39 per share, as on 2:05 PM (GMT+10), Sydney, Eastern Australia, as of 3^rd November 2021. 

Daily Technical Chart – ASX

Source: REFINITIV

Note, the purple line represents Relative Strength Index (14-Period).

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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