ASX Ltd operates the Australian Stock Exchange (ASX) and the Sydney Futures Exchange (SFE), offering a full suite of services including listings, trading, clearing and settlement. The ASX Ltd operates largely as a monopoly business. ASX Ltd’s market capitalisation is around A$17 billion.
What is the profit result for FY19
The key highlights of the FY19 results are as follows:
- Underlying net profit after tax of A$492 million, up 5.7 per cent on FY18.
- The final dividend of A$1.143 cents per share (fully franked), up 4.8 per cent on the previous year. This represents a pay-out ratio of 90 per cent. ASX will also pay a special dividend of A$1.291 cents per share (fully franked) which is equivalent to the proceeds from the sale of IRESS Ltd.
Each of ASX Ltd’s four main businesses grew, as did interest earnings, with the overall performance driven by higher cash and futures markets trading, and an increasing appetite from customers for technical connections and information services. The key driver is higher revenue from trading activities, with average daily cash value traded on the ASX increasing 11.7 per cent and contracts traded on the SFE increasing 9.9 per cent in FY19.
What is the outlook for FY20?
ASX Ltd’s management did not provide any specific guidance on the outlook for FY20 other than capital expenditure in FY20 is expected to be A$75-80 million compared with A$75.1 million in FY19. Ultimately, earnings in FY20 will be driven by turnover on the ASX and SFE. In turn, this is driven by volatility in these markets over the course of the year.
The market’s reaction is broadly neutral with its share price trading in the range $86 to $87 on Thursday 15 August 2019 compared with the recent all time high of $89.67. ASX Ltd is currently trading on a P/E ratio in the mid-thirties and a dividend yield of around 2.6 per cent.
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