Higher levels of equities and futures trading, along with growing demand for its data services, have lifted ASX Limited’s earnings and revenue over the half year. Net profit 2H19 to December was up 1.8% to $250mn on revenue of $454mn, which was up 7%, EBIT rose 6% to $315.
We expect growth to remain in the 1 – 4% range and we see the stock as a “high conviction” buy on the dip during the current market sell-off.
ASX is among the best performing stocks within our ASX 100 model portfolio. The stock remains under current buy conditions and the earnings have been slightly upgraded, following the release of the March quarter trading data.
The upgrades were driven by stronger than expected ASX 24 derivatives activity. Volumes increased 11% on the same time last year, with a record month in March 2019.
Cash equities turnover was up 9% year-over-year.
At 26x earnings and 3.2% yield, the stock looks expensive but it does offer a relatively safe harbour.