ASX Ltd (ASX: ASX) appears to have defied gravity this morning with shares in the bourse operator trading around 9% higher despite the interim profit failing to meet analyst expectations.
While the market was expecting $249 million profit in 1H FY25 it came in at $243.5 million, still up 5.6%.
However, what clearly made shareholders happy was an interim dividend of $1.112 per share, up 9.9%.
Benefitting from growth in net interest income, underlying net profit after tax increased by 10%.
The company attributed a 5.9% lift in operating revenue to $541.9 million in the half to growth from its markets, technology & data and the securities & payments divisions.
While Total Listings revenue was stable at $104.9 million, the Markets, Technology & Data and Securities & Payments businesses were up 9.9%, 6.7% and 5.2% respectively.
ASX CEO Helen Lofthouse used today’s interim update to reassure the market that the troubled five-year transformation plan to replace its aging CHESS technology is progressing.
Recent incidents with CHESS resulted in major delays in Batch Settlements, with some brokers having to borrow to settle their clients’ accounts. In light of these mishaps, Lofthouse reassured the market that they had not impacted the company’s overall strategy, including the technology modernisation program.
For Release 1, the company expects the first industry testing environment to open later this month, while work also continues on Release 2 following extensive industry consultation.
During the second quarter of FY25 the company witnessed momentum in listing activity including the listings of Cuscal (ASX: CCL), Symal Group (ASX: SYL) and DigiCoin (ASX: BTXX) late in 1H25.
Meanwhile, the company remains focused on attracting dual listings to the market; and noted the upcoming listing of Marimaca, the TSX listed copper explorer and developer.
Other key numbers reported today include:
Total expenses for the period were $220.3 million, which is down 0.2%.
Net interest income was up by 9.4% to $43.1 million.
Underlying net profit after tax was up 10.1% compared to 1H24.
Earnings margin increasing to 59.3%.
Underlying earnings per share of 130.9 cents.
Underlying ROE generated in the half was 13.5%, up 90 basis points.
Looking forward
The company reaffirmed FY25 capital expenditure guidance of $160-180 million, which is expected to remain at this level until FY27, then aim to start reducing.
Medium term underlying ROE is in the target range of 13.0–14.5%.
The company expects FY25 total expense growth of 6 to 9% with operating expense growth guidance of 4% to 7% reflecting expense management actions being undertaken.
ASX Ltd has a market cap of $13.3 billion making it the 44th largest company on the ASX; the share price is up 3% in one year and up 5.8% year to date.
ASX shares appear to be in a long-term bearish trend confirmed by multiple indicators.
Last month Morgan Stanley downgraded the company to Underweight from Equal-weight, citing the company's expected low single-digit EPS growth, which does not compare favourably with other stocks in the broker's coverage.
Consensus is Hold.
This article does not constitute financial product advice. You should consider independent advice before making financial decisions.
