ASX

Company result

Good numbers, overall, from the monopolist exchange operator, however, to our mind better still is the framing.

We think the muted performance figures shown at the last half, depicting flat to down growth relative to FY20, in turn leading to a fairly sharp selloff in the ASX share price, was a function of a misunderstood market impact associated with the RBA’s monetary policy framework.

As such, the ASX detailing, via the below graph, that the vast majority of the business continues to be performing robustly, is excellent framing for investors. In other words, the growth moderation was confined to a fairly narrow set of segmentals associated with yield curve control, and quantitative easing, two things that are out of the ASX’s hands.

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We suspect that approach is simply more digestible to the market, than examining the segmentals, as shown in the below supplementary revenue breakdown.

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The key for us in the result was the improved cost growth guidance. The market never met a declining expense profile that it didn’t like, even if it is at the margin.

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The number of FTE’s (and associated expenses) required to meet new product development (everything from shorter interval electricity futures associated with renewable technology impacts, new tech sector offerings in listed equities, plugging the 5yr bond futures gap, the engineers associated with the distributed ledger technology (blockchain) CHESS replacement program, improving the network reliability standards) had lifted appreciably over FY19 – FY21, and these pressures are now coming to an end.

Overall, a good result.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

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