ASX Ltd profit jumps: Is it a bargain?

The bottom line at ASX Ltd (ASX:ASX) has benefitted from a jump in revenues for the nine months through March 2015.

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Australia's premier financial exchange provider, ASX Ltd (ASX: ASX), today reported a solid jump in revenue and profit for the nine-month period ended 31 March, 2015.

For the first three quarters of financial year 2015, ASX boosted revenues 5.8% to $516.8 million, whilst net profit after tax, or NPAT, was $298.7 million, up 4.1% on the prior nine-month period to 31 March, 2014.

With 92 initial public offerings (IPOs) and $50.2 billion of capital raised through new listings, up 13% year over year, plus robust cash market activities, ASX Ltd was able to offset the recent implementation of fee changes in its derivatives and OTC Markets business.

The company in charge of Asia's largest interest rate derivatives market said these fee changes have already increased OTC (over-the-counter) clearing activity and will create a more sustainable and competitive business, however, they will likely result in a full-year revenue impact of approximately $19 million.

ASX Ltd also said it'll make a significant investment in technology infrastructure, incurring a once-off $7 million restructuring charge in the second half of the financial year.

"ASX achieved a positive result for the nine months to 31 March, driven by revenue growth," Managing Director and CEO Elmer Funke Kupper said. "ASX continues to invest in Australia's financial market infrastructure."

It reaffirmed full year capital expenditure guidance of between $40 and $50 million and expense growth (excluding the $7 million charge) of approximately 4%.

Is it time to buy ASX Ltd shares?

ASX Ltd shares have rallied 22% over the past year, outperforming the S&P/ASX 200 (ASX: XJO) (Index: ^AXJO) by more than 15%. Although the company has a strong track record of defensive profits and pays a reliable 4.2% fully franked dividend, at today's prices it appears fully valued given its growth outlook in the medium term.

Motley Fool contributor Owen Raskiewicz has no position in any stocks mentioned. Owen welcomes your feedback on Google plus (see below) or you can follow him on Twitter @ASXinvest. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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