ASX share price falls 1% on half-year earnings results

The ASX Limited (ASX: ASX) share price has dropped 1% in early trade after its half-year earnings release this morning, despite reporting a 6.% increase in net profit after tax (NPAT).

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The ASX Ltd (ASX: ASX) share price has dropped 1% in early trade after its half-year earnings release this morning.

The ASX recorded its 6th consecutive first-half increase in net profit after tax (NPAT) and dividend per share (DPS) as profit increased 6.8% for the half. Revenue for the exchange was up 3.8% on a statutory basis to $24.7 million while earnings before interest, tax, depreciation and amortisation rose 2.1% on a statutory basis to $319.5 million.

On a like-for-like (i.e. underlying basis) the numbers were even better, with earnings per share (EPS) up 10.1% to 11.7 cents per share (cps) with investors set to receive 7.2 cps in the form of a 114.4 dividend franked to 90%.

The big revenue drivers for the ASX were an 8.0% increase in Listing and Issuer Services, a 6.3% increase in Derivatives and OTC Markets and an 8.6% increase in Equity Post-Trade Services. The company saw its derivatives revenue increase in large part due to increased hedging as electricity prices continued to rise throughout the year.

The ASX benefitted from a broadly strong year in global equities, despite higher volatility in Q1 and Q4 2018 as broader macroeconomic headwinds continued to loom. Interest and dividend income increased 43.8% to $54.9 million during the period with net interest earned on collateral balances up 59.3% in the half.

Operating expenses increased 9.4% year-on-year to $105.2 million in 1H19 while capital expenditure of $27.6 million was more than double that of 1H18 investment. This was largely due to CHESS replacement and related infrastructure alongside investment in a secondary data centre and data analytics platform.

Foolish Takeaway

The ASX share price is currently trading at a P/E ratio of ~29x earnings which is well above the ASX200 average but remains largely beholden to volatility in global markets. If we see an increase in volatility ahead of Brexit and any ongoing US-China trade war tensions, fewer listings could spell trouble for 2H19 revenue and see the share price fall further.

I think the company is in a solid position for those looking for a bit of growth, but I'd be looking towards more capital preservation in the likes of AGL Energy Limited (ASX: AGL) or Origin Energy Ltd (ASX: ORG) at this point in the cycle.

Motley Fool contributor Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of ASX Limited. 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 Scott Phillips.

More on Share Fallers

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A worried man holds his head and look at his computer.
Share Fallers

Why 29Metals, Brainchip, Platinum, and Premier Investments shares are falling today

These ASX shares are having a tough time on hump day.

Read more »

Man with his head in his head because of falling share price.
Share Fallers

Why 29Metals, Atlas Arteria, IDP Education, and Mineral Resources shares are falling

These ASX shares are having a tough time on Tuesday. But why?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why ALS, EOS, NRW, and Patriot Battery Metals are dropping today

These ASX shares are starting the week in the red.

Read more »

A man looking at his laptop and thinking.
Technology Shares

Why are these ASX tech shares getting smashed today?

Owners of these two stocks are missing out today.

Read more »

a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.
Share Fallers

Why AGL, Brickworks, IGO, and New Hope shares are dropping today

These ASX shares are having a poor session. But why?

Read more »

Frustrated stock trader screaming while looking at mobile phone, symbolising a falling share price.
Share Fallers

Why Amcor, Arafura, Brainchip, and South32 shares are tumbling today

These ASX shares are having a tough time on hump day. But why?

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Share Fallers

Why Aussie Broadband, Liontown, Metals Acquisition, and Seek shares are falling

These ASX shares are having a poor session. But why?

Read more »