ASX Ltd (ASX: ASX), the owner and operator of the Australian Stock Exchange has reported an impressive half-yearly result.
What's happened?
The group achieved a 5.9% jump in revenues to $348.7 million, a 4.7% increase in net profit after tax to $198.6 million, a 4.5% rise in earnings per share to 102.7 cents, and a 4.6% gain in the fully franked interim dividend to 92.3 cents per share.
The solid results were broad based with all divisions contributing to the gains. Of particular note was the 7.9% increase in revenues experienced in the Listings and Issuer Services division which benefited from 71 initial public offers during the six-month period.
The Cash Markets division which houses the trading, clearing and settlement services also performed well, achieving revenue growth of 4.6%.
Buy, Hold or Sell?
ASX Ltd announced plans to spend approximately $35 million upgrading its technology infrastructure – specifically trading, risk management and market surveillance systems – over the next two years. This spending should help maintain the ASX's market-leading position.
Perhaps the most exciting news from the group's results however was the strong start to the second half – January and early February were very strong with double-digit gains being experienced. While the CEO cautioned that this level of activity could not continue through the remainder of the year, and no full year guidance was provided, it does bode well for a comparatively good second half.
Based on data provided by Morningstar, ASX Ltd is expected to earn 203.8 cents per share (cps) and pay dividends totalling 183.5 cps for the full financial year 2015. Given the result achieved in the first half it would appear that ASX Ltd could be on track to beat this forecast.
With the shares trading at $39.79 these forecasts imply a price-to-earnings ratio and dividend yield of 19.5x and 4.6% respectively; that's probably about fair value for a monopoly provider such as the ASX Ltd.
