Stock market operator ASX profit slips on higher costs; sees return to IPO activity
Profit down more than 3%, misses consensus
Flags signs of return to IPO activity
Shares down up to 3.3%
Recasts, adds share moves and analyst comments
By Shivangi Lahiri
Aug 16 (Reuters) -Australian stock market operator ASX ASX.AX said on Friday its annual underlying profit slipped 3.4%, missing market estimates, hurt by higher expenses due to regulatory commitments and technology-related costs.
Underlying net profit after tax fell to A$474.2 million ($313.5 million) for the fiscal year ended June 30, from A$491.1 million a year earlier. It was also below Visible Alpha consensus estimates of A$478.5 million.
Shares fell as much as 3.3% to A$61.890 by 0035 GMT, making ASX among the worst losers in the benchmark index .AXJO.
ASX spent around A$430 million in the 2024 financial year, roughly 15% higher than the prior year, on regulatory obligations, technology initiatives, and employee-related costs. It, however, reiterated its expense growth guidance of between 6% to 9% for the current financial year.
The exchange operator also flagged that it was "starting to see signs of a return to IPO (initial public offering) activity ... continue to see increasing levels of interest from companies considering listing on ASX".
"The more stable macro-economic conditions may be supportive of an increase in listings activity, although ongoing geopolitical instability may impact sentiment," it said.
Analysts at JPMorgan in a client note wrote that "this result is unlikely to be viewed as a catalyst for the stock despite the prospect of better volumes in FY25E on rate stabilization and potentially a better listing environment".
Analysts at both JPMorgan and Citi also flagged that the corporate regulator's investigation into the exchange operator's handling of a troubled software upgrade remained an overhang on the stock.
ASX was sued this week by the Australian Securities & Investments Commission (ASIC) for allegedly "misleading" the public about the progress of a switch to a new blockchain-based clearing and settlement platform.
($1 = 1.5129 Australian dollars)
Reporting by Shivangi Lahiri in Bengaluru; Editing by Anil D'Silva, Rashmi Aich and Jamie Freed
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