ASX year profit up 46 percent

SYDNEY, Australia (Reuters) -- ASX Ltd., Asia-Pacific's second-biggest listed stock exchange, reported a 46 percent rise in annual net profit, ahead of analysts' forecasts, helped by record equity trading volume.

ASX gave no specific earnings guidance, but said the pipeline of new listings was healthy, especially in the mining sector, after a strong year for listings in 2006/07.

"Generally favorable economic conditions are conducive to an equally buoyant listings year ahead, particularly as any U.S.-exported credit squeeze will inevitably dampen some of the momentum of the private equity sector," Chief Executive Robert Elstone said in the group's annual report.

A record-setting market, strong flows into managed funds and a private-equity fueled takeover boom boosted trading volumes on ASX.

But recent volatility and a pullback in stock markets have raised doubts about the outlook for exchange companies such as ASX and rivals in Hong Kong and Singapore, which are heavily geared to the market performance.

ASX shares were volatile on Thursday as the domestic market was broadly dented by persistent worries about the U.S. sub-prime sector.

By 0100 GMT, ASX shares were down 2.5 percent at A$43.89, after rising as much as 1.4 percent at the open, while the benchmark index was down 1.2 percent.

ASX, which last year bought SFE Corp. to expand its derivatives business, reported net profit excluding items of A$313.1 million ($257 million) for fiscal year ended June, up from a pro-forma profit of A$215 million a year ago, combining ASX and SFE.

"The result was driven by strong broad-based growth across equities, derivatives and listing, combined with an outstanding 18 percent drop in cash costs following achievement of SFE merger synergies and further cost cut at ASX," Citigroup said in a note to clients.

ASX, which houses around 2,100 listed entities with a combined market capitalization of A$1.6 trillion at end June, achieved a 35 percent rise in cash market trading value to A$1.3 billion.

Trading volumes in the underlying cash and derivatives markets had accelerated in the new fiscal year in the wake of volatile equity markets and wider credit market spreads caused by fallout from the U.S. subprime mortgage problems, Elstone added.

When compared with ASX's stand alone year-ago profit, growth stood at 128.5 percent.

Nine analysts on average had projected net profit of A$300.2 million.

Citigroup said it expected further savings from the physical merger of the two trading platforms and clearing houses in time.

However, ASX ruled out any capital return in the near-term until the final shape of the two clearing facilities was known.

At Wednesday's close of A$45.00, ASX shares had risen 18 percent in 2007, easily outpacing a 2.1 percent rise in the benchmark S&P/ASX 200 Index. However, the stock is off about 13 percent from July's record closing high of A$51.71.

Among ASX's regional peers, Hong Kong Exchanges and Clearing Ltd., Asia's top listed bourse, Wednesday reported its best ever quarterly profit, while last month Singapore Exchange Ltd. reported strong profit growth on the back of swelling volumes.

Some 283 new companies listed on the exchange last fiscal year, while about A$78 billion was raised through initial public offers and secondary capital raisings. E-mail to a friend

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