Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Insights - The valuation of Hong Kong Exchanges and Clearing Limited (HKEX) has lagged behind trading volume, with a recovery in IPOs positively impacting the long-term Average Daily Turnover (ADT) [4][6] - In 2025, the ADT is projected to reach 2200 billion HKD, with a year-on-year increase of 66.9% [4] - The company's net profit forecast for 2025-2027 has been raised to 168, 169, and 172 billion HKD, respectively, reflecting a year-on-year growth of 29.0%, 0.2%, and 2.2% [4] Summary by Sections Market Activity and Performance - The Hong Kong stock market has seen a continuous improvement in activity, with the ADT reaching a historical peak of 2973 billion HKD in February 2025, representing a year-on-year increase of 230% [13][14] - The trading volume remained active in March, with figures of 3181 and 2863 billion HKD, showing year-on-year increases of 203% and 152% respectively [13] Regulatory Support for IPOs - Regulatory measures have encouraged A-share companies to list in Hong Kong, enhancing market capitalization and activity [6] - As of February 2025, 10 IPOs have occurred, doubling year-on-year, with a financing scale of 7.8 billion HKD, up 258% [32][34] - The approval process for IPOs has been optimized, facilitating the listing of mainland companies in Hong Kong [36] Financial Projections - The company's revenue for 2025 is projected to be 27,785 million HKD, with a year-on-year growth of 24.18% [7] - The net profit for 2025 is estimated at 16,828 million HKD, reflecting a year-on-year increase of 28.95% [7] - The sensitivity analysis indicates that an ADT of 1700, 2200, and 3000 billion HKD corresponds to net profit changes of +8%, +29%, and +62% respectively [27]

Investment Rating - The investment rating for Hong Kong Exchanges and Clearing Limited (00388.HK) is "Buy" (maintained) [1] Core Views - The valuation of Hong Kong Exchanges is lagging behind trading volume, with a recovery in IPOs benefiting the long-term Average Daily Turnover (ADT) [4] - The trading volume in the Hong Kong stock market has been active, with February's ADT reaching a historical peak of HKD 297.3 billion, a year-on-year increase of 230% [13] - The company has adjusted its ADT forecasts for 2025-2027 to HKD 2200 billion, HKD 2000 billion, and HKD 2000 billion respectively, reflecting a year-on-year growth of 66.9%, a decline of 9.1%, and flat growth [4] - The net profit forecasts for 2025-2027 have been raised to HKD 16.8 billion, HKD 16.9 billion, and HKD 17.2 billion respectively, indicating year-on-year growth of 29.0%, 0.2%, and 2.2% [4] Summary by Sections Market Activity and Trading Settlement Business - The Hong Kong stock market's activity has been improving, with February's ADT reaching a historical peak of HKD 297.3 billion, a year-on-year increase of 230% [13] - The trading settlement business, which is highly correlated with ADT, contributed over 53% of the company's revenue in 2024 [5] IPO Recovery and Market Structure - Regulatory support for A-share companies to list in Hong Kong is expected to enhance market capitalization and activity [6] - In the first two months of 2025, there were 10 IPOs in Hong Kong, doubling year-on-year, with a financing scale of HKD 7.8 billion, an increase of 258% [6][32] Financial Performance and Valuation - The company's revenue for 2025 is projected to be HKD 27.785 billion, reflecting a year-on-year growth of 24.18% [7] - The net profit for 2025 is estimated at HKD 16.828 billion, indicating a year-on-year increase of 28.95% [7] - The current price-to-earnings (P/E) ratio is projected to be 27.8 times for 2025, compared to a historical average of approximately 37 times over the past decade [4][7]

Hong Kong Exchanges and Clearing (00388) Q4 2024 Earnings Call March 17, 2025 06:12 AM ET Company Participants Ricky Choi - Managing Director, Head of Group Strategy & Investor RelationsBonnie Y CHAN - CEOVanessa LAU - COO & Group CFOGary Lam - Head of Greater China Financials ResearchGurpreet Sahi - Executive DirectorKatherine NG - Head of ListingMichael Li - Managing Director Conference Call Participants Charles Zhou - Stock Analyst Ricky Choi Good afternoon, ladies and gentlemen. Welcome to HKEX twenty t ...

Financial Performance - The group achieved a record revenue and other income of HKD 22.374 billion in 2024, representing a 9% increase compared to 2023[22]. - Operating expenses rose by 6% in 2024, driven by increased employee and IT costs, although some expenses related to the 2022 nickel market incident were offset[22]. - EBITDA for 2024 was HKD 16.281 billion, up 10% from 2023, with an EBITDA margin of 74%, an increase of 1 percentage point[23]. - Profit attributable to shareholders reached HKD 13.050 billion, reflecting a 10% increase from the previous year[24]. - Major business revenue increased by 9% in 2024, reaching HKD 20,559 million, driven by higher trading volumes in cash, derivatives, and commodities markets[26]. - Net investment income from company funds rose by 18% to HKD 1,748 million, primarily due to a decrease in valuation losses from unlisted equity investments[26]. - In Q4 2024, total revenue reached a record high of HKD 6,381 million, up 31% year-over-year[39]. - Q4 2024 shareholders' profit reached HKD 3,780 million, a 46% increase compared to Q4 2023[41]. - The total revenue and other income for the year reached a record high of 22.4 billion, up 9% from 2023[57]. - The board declared a total annual dividend of 9.26 per share, including a second interim dividend of 4.90 per share[58]. Market Developments - New product launches included the first batch of ETF options and the first virtual asset spot ETF in Asia[17]. - The company plans to open an office in Riyadh in 2025, expanding its market presence[17]. - The company continues to strengthen its interaction with international investors and issuers, enhancing its global market position[13]. - The company anticipates that geopolitical and macroeconomic trends will continue to impact global markets, but positive signs of economic recovery are emerging[13]. - The number of new IPOs in 2024 reached 71, raising a total of 88 billion, ranking fourth globally[56]. - The company announced a multi-year infrastructure optimization plan to enhance market capabilities[59]. - The company is actively working on optimizing its listing mechanisms and enhancing corporate governance standards[62]. - The company is focused on maintaining high standards of corporate governance and compliance with regulatory requirements[135]. Trading Activity - Average daily trading value of equity securities on the exchange surged by 29% to HKD 120 billion[27]. - Average daily trading value for Stock Connect (Shanghai and Shenzhen) increased by 39% to RMB 150.14 billion[27]. - Average daily trading value of equity securities in Q4 2024 soared by 113% to HKD 171.5 billion[44]. - Major business revenue rose 24% to 6.017 billion, driven by increased trading volumes in spot and derivative markets[49]. - The average daily turnover in the cash market reached HKD 131.8 billion, a 26% increase year-on-year, with a record high of HKD 620.7 billion on October 8, 2024[77][78]. - The derivatives market saw an average daily contract volume of 1.6 million, up 15% from the previous year[78]. - The average daily trading volume for ETPs (including ETFs and leveraged and inverse products) reached a record high of RMB 189 billion in 2024, up 35% from RMB 140 billion in 2023[185]. Sustainability and Corporate Responsibility - The company is committed to sustainable development, achieving carbon neutrality in its operations by the end of 2024[20]. - HKEX is set to implement mandatory emissions reporting for all LME registered aluminum brands by June 15, 2025, in accordance with the EU Carbon Border Adjustment Mechanism (CBAM)[63]. - The company committed to donating HKD 86 million in 2024 to support various projects focused on financial education, inclusivity, poverty alleviation, and environmental sustainability[66]. - HKEX is expanding its initiatives to promote responsible supply chains in the metals industry, including ongoing support for projects addressing child labor in African mining[66]. - The introduction of climate-related disclosure regulations aligned with IFRS S2 positions Hong Kong as a leader in sustainability reporting[87]. - The total amount raised from new ESG-related bonds in 2024 was HKD 291 billion, indicating a strong market interest in sustainable finance[189]. Strategic Initiatives - The company announced a multi-year platform development plan to enhance market attractiveness and competitiveness[13]. - The company plans to achieve carbon neutrality by the end of 2024 and has submitted science-based greenhouse gas reduction targets for verification[64]. - The company is focused on optimizing infrastructure and product ecosystems to enhance market liquidity and resilience against macroeconomic fluctuations[98]. - The company plans to invest $200 million in digital transformation initiatives over the next two years[119]. - A strategic acquisition of a fintech startup was announced, aimed at integrating advanced analytics capabilities into existing services[115]. Governance and Management - Independent non-executive director Liang Baihan has served on the board since April 26, 2017, with a term extended until April 26, 2026[126]. - The company has a strong governance structure with members serving on various committees including audit, risk, and investment committees[126][128][130]. - The board includes members with extensive experience in finance and risk management, enhancing the company's strategic decision-making capabilities[128][130]. - The board's diverse expertise supports the company's market expansion and product development strategies[130][135]. - The company is committed to continuous improvement in its operational efficiency and risk management practices[135].

Investment Rating - The report maintains a "Buy" rating for Hong Kong Exchanges and Clearing Limited (388) and raises the target price to HKD 400.0, reflecting an 18.6% upside from the previous closing price [5][6]. Core Insights - The core drivers of the company's performance are the increased activity in the cash market and growth in commodity business, supported by policy benefits and a diversified product portfolio [5]. - The company achieved record high revenues and net profits in 2024, with total revenue of HKD 223.7 billion (up 9.1% year-on-year) and net profit of HKD 130.5 billion (up 10.0% year-on-year) [2][3]. Revenue and Profitability - The company reported a quarterly revenue of HKD 63.8 billion in Q4 2024, representing a significant year-on-year increase of 31.4%, with net profit for the quarter reaching HKD 37.8 billion, up 45.6% year-on-year [2]. - The annual dividend per share is set at HKD 9.3, maintaining a payout ratio of 90.0%, ensuring stable shareholder returns [2]. Market Performance - The cash market revenue for the year was HKD 86.2 billion, a year-on-year increase of 18.5%, driven by a substantial rise in average daily trading volume [3]. - The average daily trading volume in the cash market reached HKD 1,318 billion, up 26.0% year-on-year, with Q4 2024 achieving a record high of HKD 1,869 billion, a 105.0% increase year-on-year [3]. Derivatives and Investment Income - The derivatives segment saw a decline in revenue to HKD 50.1 billion (down 12.0% year-on-year), primarily due to reduced margin investment income [4]. - The investment income for the year was HKD 49.3 billion, a slight decrease of 0.6% year-on-year, with net investment income from proprietary funds increasing by 17.6% to HKD 17.5 billion [4]. Future Outlook - The report highlights the potential for future growth driven by policy support for IPO facilitation and the expansion of cross-border trading channels, alongside a diversified product offering including tech stock ETFs and Southeast Asian markets [5].

Core Viewpoint - The Hong Kong Stock Exchange (HKEX) and the fully-owned subsidiary of the Exchange Fund, Clearstream, signed a memorandum of understanding to optimize post-trade securities infrastructure in Hong Kong's capital market, supporting the long-term development of fixed income and currency products [1] Group 1 - The collaboration aims to enhance efficiency across asset classes, including equities and fixed income, expand the use of mainland bonds as collateral, and strengthen Hong Kong's position as a bond issuance center [1] - The agreement is seen as a significant milestone, with both parties committed to supporting the development of Hong Kong's capital market by providing a richer array of products covering more asset classes [1] - The CEO of HKEX emphasized the strategic commitment to building a vibrant, world-leading ecosystem for fixed income and currency products in Hong Kong, hoping to advance the development of the fixed income market and the internationalization of the Renminbi [1]

Investment Rating - The report maintains a "Buy" rating for Hong Kong Exchanges and Clearing Limited (0388.HK) [8]. Core Views - In the medium to long term, the report anticipates that a series of connectivity policies will enhance the basic conditions for recovery in the capital market, leading to increased liquidity and overall market activity and valuation for the Hong Kong stock market [2][6]. - The company achieved revenue and other income of HKD 223.74 billion in 2024, representing a year-on-year increase of 9.06%, and a net profit attributable to shareholders of HKD 130.50 billion, up 10.0% year-on-year [6]. Summary by Relevant Sections Financial Performance - For the full year 2024, Hong Kong Exchanges reported a revenue of HKD 223.74 billion, a 9.06% increase year-on-year, and a net profit of HKD 130.50 billion, reflecting a 10.0% year-on-year growth. In Q4 2024, the net profit increased by 45.55% and 20.19% on a year-on-year and quarter-on-quarter basis, respectively [6][10]. - The breakdown of revenue sources shows that trading and trading system usage fees, listing fees, settlement and clearing fees, and other income have varied growth rates, with trading fees increasing by 18.22% and settlement fees by 21.42% [6][10]. Market Activity - The report highlights a significant increase in trading activity across various markets, with the average daily turnover in the stock market rising by 28.8% year-on-year and the average daily turnover in the Shanghai-Hong Kong Stock Connect increasing by 38.6% [6][10]. - The report notes that the number of new listings increased, with 71 new companies listed in 2024, raising a total of HKD 23.2 billion, despite a slight decline in listing fees [6][10]. Future Projections - The report projects that the company will achieve revenue and other income of HKD 252.28 billion, HKD 275.24 billion, and HKD 296.54 billion for the years 2025, 2026, and 2027, respectively. The net profit attributable to shareholders is expected to be HKD 149.92 billion, HKD 164.50 billion, and HKD 177.93 billion for the same years [2][10]. - Corresponding PE ratios are forecasted to be 30.87, 28.13, and 26.01 for the years 2025, 2026, and 2027, respectively [2][10].

Investment Rating - The report maintains an "Accumulate" rating for the company [1] Core Views - The Hong Kong Stock Exchange (HKEX) achieved record high revenues and profits in 2024, driven by significantly increased trading activity in the Hong Kong stock market [4][9] - The report highlights a strong performance in the fourth quarter, with total revenue growing by 31.4% year-on-year to HKD 63.8 billion, and net profit increasing by 45.6% to HKD 37.8 billion [4][9] - The report anticipates continued growth in net profit for 2025-2026, with projections raised by 12.2% and 13.1% respectively [9] Summary by Sections Financial Performance - In 2024, total revenue reached HKD 22.37 billion, a year-on-year increase of 9.1%, with major business revenue at HKD 20.56 billion, up 8.5% [4] - The net profit attributable to shareholders was HKD 13.05 billion, reflecting a 10.0% increase year-on-year [4] - The EBITDA margin was 74%, up by 1 percentage point from the previous year [4] Revenue Breakdown - Trading fees, system usage fees, and settlement fees totaled HKD 11.91 billion, accounting for 53.2% of total revenue, with a year-on-year increase of 19.5% [5] - Investment income netted HKD 4.93 billion, a slight decrease of 0.6% year-on-year [5] - Listing fees from the exchange amounted to HKD 1.48 billion, down 2.6% year-on-year [5] Market Activity - The average daily trading volume for stock securities was HKD 1.2 trillion, up 28.8% year-on-year [6] - Northbound and southbound trading volumes saw significant increases, with northbound trading up 38.6% and southbound trading up 55.0% year-on-year [6] New Listings - In 2024, the HKEX welcomed 71 new listings, raising HKD 88 billion, a 90.1% increase year-on-year [7] - The report notes a healthy pipeline of 84 listing applications as of the end of 2024 [7] Future Projections - Revenue is projected to grow to HKD 25.32 billion in 2025, with a growth rate of 13.16% [10] - Net profit is expected to reach HKD 14.99 billion in 2025, reflecting a growth rate of 14.91% [10] - The report anticipates a P/E ratio of 30X for 2025, indicating a favorable valuation outlook [9]

Investment Rating - The investment rating for the company is "Outperform the Market" [5][3][12] Core Views - The company's revenue for 2024 was HKD 22.374 billion, a year-on-year increase of 9.1%, and the net profit attributable to shareholders was HKD 13.050 billion, up 10.0% year-on-year. The EBITDA margin improved to 74%, an increase of 1 percentage point from 2023 [7][3] - The fourth quarter saw significant growth, with revenue reaching HKD 6.017 billion, a year-on-year increase of 33.2%, and a quarter-on-quarter increase of 24.0%. The net profit attributable to shareholders for Q4 was HKD 3.780 billion, up 45.6% year-on-year and 20.2% quarter-on-quarter [7][3] - The report attributes the performance improvement to heightened activity in the spot and derivatives markets, with the average daily trading volume (ADT) for the exchange's spot market reaching HKD 171.5 billion, a year-on-year increase of 113.3% [8][11] Summary by Sections Financial Performance - The company reported a total revenue of HKD 22.374 billion for 2024, with a net profit of HKD 13.050 billion. The EBITDA margin was 74%, and the dividend payout ratio remained at 90% [7][3] - For Q4, revenue was HKD 6.017 billion, with a net profit of HKD 3.780 billion, indicating strong performance driven by trading activity [7][3] Market Activity - The average daily trading volume in the Hong Kong stock market increased significantly, with the Hang Seng Index averaging HKD 226.6 billion from January to February 27, 2025, up 79.9% from the full year of 2024 [11][2] - The company's revenue structure is closely tied to market activity, with trading fees and system usage fees accounting for nearly 60% of total revenue [11][2] Earnings Forecast - The earnings forecast for 2025 and 2026 has been adjusted upwards by 6.0% and 7.4%, respectively, with projected net profits of HKD 16.335 billion and HKD 18.152 billion for those years [3][12] - The estimated price-to-earnings (PE) ratio for 2025 is 28.0x, reflecting the company's strong earnings growth potential [3][12]

Investment Rating - The investment rating for the company is "Buy" with a target price of HKD 411.00 [8][9]. Core Insights - The company's 4Q24 performance met expectations, with revenue and net profit reaching HKD 63.8 billion and HKD 37.8 billion, respectively, representing year-on-year increases of 31% and 46% [1]. - The average daily trading volume (ADT) for Hong Kong stocks in 4Q24 was HKD 186.9 billion, a significant year-on-year increase of 105% [2]. - The company is expected to maintain high profitability in 1Q25 due to continued market enthusiasm and a sufficient IPO pipeline [1][2]. Summary by Sections Trading Business - 4Q24 trading revenue was HKD 37.4 billion, exceeding previous expectations, primarily due to a higher proportion of small transactions leading to a higher effective trading fee rate [2]. - The ADT for Hong Kong stocks increased significantly to HKD 186.9 billion, with derivatives and commodities showing mixed performance [2]. IPO Activity - The number of IPOs in 4Q24 rose to 26, with total financing amounting to HKD 32.4 billion, indicating a healthy IPO environment [3]. - The IPO queue reached 114 companies, suggesting a robust pipeline for future listings [3]. Investment Performance - The investment scale increased to HKD 238.6 billion by the end of 4Q24, although the overall investment yield declined to 2.1% [4]. - The company anticipates a gradual decrease in investment yields due to lower interest rates, but still expects to maintain reasonable returns in the short term [4]. Profit Forecast and Valuation - The net profit forecasts for 2025 and 2026 have been adjusted to HKD 13.9 billion and HKD 13.3 billion, respectively, reflecting a positive outlook based on active trading conditions [5]. - The target price has been revised upwards to HKD 411.00 based on a discounted cash flow (DCF) valuation method [5].