THE outlook has never looked brighter for the Singapore Exchange (SGX) - a sky-high share price, a trebling of first-quarter profits and persistent hopes that it may be a takeover target.

Yet the catalogue of success - underscored by yesterday's profit figures - has raised a nagging question: Has SGX's sky-high market value put it out of reach for most takeover suitors?

The numbers are astounding: SGX shares have risen 186 per cent this year, propelling its market value from $6.06 billion to $17.35 billion.

No other major listed bourse has managed a share price rise as good as the SGX this year, except the Hong Kong Exchange, whose fortunes are now tied to the booming China economy.

Its market value makes SGX more valuable than exchanges many times its size.

These include the London Stock Exchange, whose Alternative Investment Market is the world's most successful stock market for small firms, and the Australian Securities Exchange, host to some of the world's biggest mining firms now revelling in a commodities boom.

Only a few listed global bourses - NYSE Euronext, Deutsche Boerse and Hong Kong Exchange - are valued more than the SGX.

NYSE Euronext is worth US$22.3 billion (S$32.8 billion), not that high a figure given that it straddles both sides of the Atlantic, while Deutsche Boerse is valued at 21 billion euros (S$43.4 billion).

Analysts are divided over whether SGX's sterling first quarter figures can help underpin its lofty valuations, which are nudging it off the radar as a takeover target.

Certainly, the numbers unveiled by SGX yesterday were impressive. Revenues for the first quarter ended Sept 30 rose by 111.5 per cent to $219.7 million, while net profit surged 172.7 per cent to a record $130 million, as turmoil hit global stock markets following the sub-prime crisis in the United States.

This was due to a surge in securities market revenues which rose 190.3 per cent to $141.2 million, as clearing fees - the income earned by SGX clearing equities trades done through its computer systems - tripled to $95.3 million. Revenue from clearing derivatives increased 39.3 per cent to $37.3 million.

But analysts are divided over whether the rise in first quarter revenues which SGX gets from share trading is sustainable.

CIMB-GK cut its call yesterday on SGX from outperform to underperform, suggesting that securities turnover had already peaked. 'We believe that there will be a cheaper price to get back into the stock,' it said.

But Goldman Sachs was more bullish, arguing that SGX is an 'appealing merger & acquisition play', and that daily turnover of shares had shown a jump in the second half.

A dealer who went through the statement that accompanied the first-quarter results said SGX chief executive Hsieh Fu Hua failed to discuss one crucial issue.

This relates to China's sudden decision last year to stop allowing mainland firms to go overseas to list on bourses such as SGX.

So while the first quarter's initial public offerings (IPOs) rose to 22, compared with six in the same period last year, SGX's future growth may stagnate if the Chinese IPO pipeline dries up.

'SGX's growth and attraction as a takeover target will depend on its success to ride on China's booming economy. But Mr Hsieh fails to tell us how he plans to grow revenues if China IPOs don't come through,' said the dealer.

engyeow@sph.com.sg