The share market operator, ASX Ltd (ASX: ASX), recently put out a trading update, in which it said that first-half revenue was up 11.2% to $602.8 million and net profit was expected to grow by more than 8%.
Costs, however, were also expected to be up, growing by an estimated 13% to 15% for the full financial year, or 20% to 23% once costs associated with an ASIC inquiry into the company were factored in.
The company said this regarding their costs:
A key driver for the increase in total expenses has been our decision to make further upgrades to the capacity and capability of resources to uplift risk management and modernise and support our major technology platforms. This reassessment of our investment requirements for key strategic priorities was informed by findings from the Inquiry Panel's report.
The ASX said slower uptake of e-statements at a time of high trading volumes also contributed to the increase in expense guidance.
On the profit front, the ASX said its unaudited underlying net profit was up 3.9% to $263.6 million, and net profit was up 8.3% to the same figure.
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Shares looking fully priced
So what does this all mean for investors? The team at Jarden have run the ruler over the results and believes there is still some modest upside to be had.
They have a target price of $58 for ASX shares, compared with $57.47 at the close on Thursday, after the shares increased sharply following the market update on Wednesday.
The Jarden team said there are still some questions to be answered around costs, however.
With ASX announcing its second update to total cost guidance since Jun-25, it is increasingly difficult to gain comfort over the medium-term cost trajectory. Whilst positive revenue drivers translated more strongly than expected to top line and helped offset cost escalation pressures, with ASIC Chairman, Joe Longo, commenting that ' tangible progress' at ASX was a top priority, we see scope for FY27 costs to take a further step up following the release of the final ASIC Inquiry report (due by 31 March, 2026).
The Jarden team said that despite an attractive valuation from a P/E point of view, the company would have a lot to juggle in terms of "large-scale technology execution, risk management uplift and shareholder returns'' over the coming period.
While Jarden's price target does envisage modest upside, the broker has a neutral rating on the shares, "given risks are skewed to downside''.
ASX was valued at $11.16 billion at the close of trade on Thursday.
