Stakeholder Focus
RESULTS
Need To Know
- FY23 Result 2% short driven by higher costs.
- No change to FY24 cost guidance 12-15%, CAPEX $110-140m
- Little new information from Results. Regulatory focus outweighs shareholder focus near term.
FY23 Result Overview:
Revenue $1,010m vs $1,016m consensus
EBITDA $673m vs $686m consensus
NPAT $491m vs $501m consensus
EPS $2.54 vs $2.59 consensus
DPS $2.28 vs 2.34 consensus.
Highlights
Soft result driven by higher cost growth, 12.3% vs ASX guidance for 12%. Cost growth is broad-based – ASX CHESS review, higher headcount (1050 vs 925), and higher administration costs.
Cost guidance maintained from June Investor Day of 12-15% for FY24E. Ex the CHESS-specific costs, underlying cost growth is ~8%.
ASX has flagged a cost-out program to impact FY25E looking at staff numbers, staff mix and technology/systems, and procurement. The market has 7% cost growth factored in.
CAPEX guidance of $110-140m maintained for FY24 and into the medium term. CAPEX spending remains ahead of the depreciation charge, implying catch-up deprecation over the coming years.
Outlook: ASX is hopeful that inflation eases encouraging growth in cash market volumes. ASX suggests it has a solid pipeline of corporates looking to list if conditions improve. We expect low negative single-digit earnings revisions by consensus.
Investment Implications
ASX is navigating a tough period of management change, soft volumes and listing activity whilst trying to undertake a period of catch-up investment spend.
We expect the regulatory and stakeholder focus to remain the main game for ASX over FY24/FY25. Getting the ASX technology platform right is critical to warding off the potential for greater regulatory oversight. Shareholder focus is deprioritised in this environment.
It remains too early to get more positive on the ASX. Given CHESS replacement program will not be known in terms of scope and costs until late 4QCY23, there remains a risk that higher costs continue in FY25, crimping free-cash-flow for another year. We also believe it will be difficult to materially cut into the cost base whilst the regulatory focus remains elevated.
Stock Overview
Share Price
Company Overview
ASX is an Australian exchange that operates markets for equities, fixed income, commodities, and energy. It provides various services including trading, clearing, settlement, and registry, as well as central counterparty clearing services.
Disclaimers and Disclosures
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