Investment Rating - The investment rating for Hong Kong Exchanges and Clearing Limited (00388.HK) is "Buy" (maintained) [1]. Core Views - The report highlights the optimization of the stock market settlement fee structure, which will not change the fee rate but will lower transaction costs for small trades, thereby promoting retail trading activity. The average fee rate is expected to remain unchanged, benefiting market liquidity [4][5]. - The report anticipates a recovery in trading sentiment for Hong Kong stocks, projecting an increase in average daily trading (ADT) volumes from 1,320 billion HKD in 2024 to 2,000 billion HKD in 2025, followed by a slight decline to 1,800 billion HKD in 2026. This is expected to lead to an increase in net profit forecasts for 2024-2026 [4][6]. - The report suggests that the active performance of technology stocks and a revival in Hong Kong IPOs will likely result in improved performance and valuation for the exchange, leading to a "Davis Double" effect [4][6]. Summary by Sections Financial Performance - The report provides financial projections indicating that revenue is expected to grow from 20,516 million HKD in 2023 to 28,040 million HKD in 2025, with a year-on-year growth of 24.1% in 2025 [7]. - Net profit is projected to increase from 12,986 million HKD in 2024 to 16,484 million HKD in 2025, reflecting a year-on-year growth of 26.9% [7]. - The report also includes estimates for earnings per share (EPS), which are expected to rise from 10.2 HKD in 2024 to 13.0 HKD in 2025 [7]. Market Activity - The report notes that the average daily trading volume (ADT) for Hong Kong stocks is expected to increase significantly, with projections of 1,320 billion HKD in 2024 and 2,000 billion HKD in 2025, indicating a strong recovery in market activity [4][6]. - The report highlights that the trading sentiment has improved, with recent data showing a substantial increase in ADT to 3,358 billion HKD, a year-on-year increase of 232% [5]. Valuation Metrics - The report provides valuation metrics, indicating that the price-to-earnings (P/E) ratio is expected to decrease from 34.2 in 2024 to 27.0 in 2025, suggesting potential for valuation improvement [7]. - The report also mentions that the current P/E ratio (TTM) stands at 37.5, which is within the 48th percentile of the past five years, indicating room for further valuation expansion [6].

Investment Rating - The report maintains an "Outperform" rating for the company [4][6]. Core Insights - The company operates as a crucial hub connecting Chinese and international capital markets, holding a near-monopoly position in Hong Kong's capital market [7][8]. - The business model is characterized by a light-asset approach with high gross margins, and the majority of profits are returned to shareholders through dividends [2][9]. - The company benefits from the revaluation of Chinese assets and the increasing attractiveness of Hong Kong stocks to mainland investors, which is expected to sustain trading activity [3][11]. Revenue and Financial Performance - For the first three quarters of 2024, the company reported total revenue of HKD 15.993 billion, with contributions from various business segments: cash business (39.7%), derivatives (28.2%), commodities (13.1%), data and connectivity (9.8%), and project income (9.2%) [8][19]. - The EBITDA for the same period was HKD 115.87 billion, reflecting a high EBITDA margin of 72.5% [2][9]. - The projected net profit for 2024-2026 is expected to grow at a compound annual growth rate (CAGR) of 16.5%, 11.5%, and 9.6% respectively [4][5]. Business Segments - The company’s operations are divided into four main segments: cash business, derivatives, commodities, and data services, each contributing significantly to overall revenue [8][19]. - The cash business primarily includes trading and settlement services for stocks, bonds, and ETFs, while the derivatives segment focuses on options and futures trading [8][21]. - The commodities segment, mainly operated through the London Metal Exchange, has shown stable trading volumes but lower profit contributions compared to other segments [42][44]. Market Dynamics - The report highlights the increasing role of southbound trading, which has become a significant driver of trading volume in Hong Kong, with southbound trading accounting for over 50% of total trading activity since early 2015 [3][11]. - The company is strategically positioned to benefit from ongoing capital market reforms and the expansion of mutual market access initiatives between Hong Kong and mainland China [11][12]. Future Outlook - The company is expected to maintain its competitive edge through continuous innovation in its service offerings and by enhancing its technological capabilities [11][12]. - The anticipated growth in trading volumes and the influx of new listings, particularly from high-quality Chinese companies, are expected to further bolster the company's revenue streams [25][26].

Group 1 - The Hong Kong Stock Exchange has proposed to lower the minimum price fluctuation for stocks in the Hong Kong securities market [1] - The decision to implement the changes will occur in two phases, with the first phase scheduled for mid-2025 [1] - After reviewing the implementation of the first phase, the second phase is expected to be launched in mid-2026 [1]

Investment Rating - The report maintains a **Buy** rating for Hong Kong Exchanges and Clearing Limited (HKEX) with a target price of **360 HKD**, representing a **16% upside** from the current price [3][10] Core Views - HKEX delivered **strong performance** in the first three quarters of 2024, with **revenue and other income** reaching **15.99 billion HKD** (YoY +2%), the **second-highest** in history [3] - **Net profit attributable to shareholders** increased by **5 million HKD** to **9.27 billion HKD**, driven by higher trading and clearing fees from **spot, derivatives, and commodity markets** [3] - **Spot market** revenue reached **6.35 billion HKD**, with **average daily turnover** growing **5% YoY** to **102.7 billion HKD**, supported by **economic stimulus measures** in mainland China and **global monetary easing** [3] - **Stock Connect** performance was robust, with **average daily turnover** rising **14% YoY** to **123.3 billion CNY**, contributing **1.78 billion HKD** in revenue (YoY +4%) [3][7] - **Derivatives market** saw **record-high average daily volume** of **1.516 million contracts** (YoY +12%), though revenue declined **12%** to **4.28 billion HKD** due to lower **margin investment income** [3] - **Commodities market** revenue surged **31% YoY** to **2.1 billion HKD**, driven by higher **LME trading and clearing fees** [3] - **Investment income** decreased **4% YoY** to **3.73 billion HKD**, primarily due to lower **margin requirements** and increased **interest rebates** to attract trading volume [3] Business Segment Performance - **Trading and trading system usage fees**: **4.98 billion HKD** (YoY +6%) [3] - **Clearing and settlement fees**: **3.18 billion HKD** (YoY +7%) [3] - **Listing fees**: **1.08 billion HKD** (YoY -6%) [3] - **Depository and agency services fees**: **890 million HKD** (YoY -1%) [3] - **Market data fees**: **810 million HKD** (YoY -2%) [3] - **Other income**: **1.26 billion HKD** (YoY +8%) [3] Financial Forecasts - **Revenue**: Expected to grow from **22.23 billion HKD** in 2024 to **24.38 billion HKD** in 2026 [10] - **Net profit**: Projected to increase from **12.77 billion HKD** in 2024 to **13.93 billion HKD** in 2026 [10] - **Diluted EPS**: Forecasted to rise from **10.07 HKD** in 2024 to **10.99 HKD** in 2026 [10] - **Dividend per share**: Anticipated to grow from **9.0 HKD** in 2024 to **9.9 HKD** in 2026 [10] Market Performance - **Average daily turnover** in the **Hong Kong market** reached **102.7 billion HKD** in the first three quarters of 2024, a **5% YoY increase** [3] - **Stock Connect average daily turnover** stood at **110.3 billion CNY** (YoY +4%), with **Southbound turnover** at **39.6 billion HKD** (YoY +37%) [8] - **Stock Connect revenue** accounted for **11%** of HKEX's total revenue and other income in the first three quarters of 2024 [9]

Group 1 - The Hong Kong Stock Exchange is preparing multiple optimization measures for the Stock Connect program, including the introduction of block trading and the inclusion of Real Estate Investment Trusts (REITs) [1] - The measures will also incorporate RMB stock trading counters into the Hong Kong Stock Connect [1] - These optimizations aim to provide more opportunities and choices for international and domestic investors in asset allocation [2]

Core Viewpoint - The Hong Kong Stock Exchange (HKEX) has released a white paper celebrating the tenth anniversary of the mutual market access between Mainland China and Hong Kong, emphasizing its commitment to further collaboration and enhancement of market connectivity [1] Group 1: Market Development - HKEX aims to continue working closely with Mainland partners and market participants under the guidance of regulatory authorities to enrich product categories and expand the range of underlying assets [1] - The exchange plans to continuously optimize the trading mechanisms and supporting services of the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect [1] Group 2: Investor Engagement - HKEX is exploring additional measures to enhance investor participation and convenience in the market [1] - The exchange is committed to improving arrangements for Bond Connect and Swap Connect to facilitate cross-border investment [1]

Investment Rating - The report maintains a "Buy" rating for Hong Kong Exchanges and Clearing Limited (0388.HK) [6][8]. Core Views - The report highlights that the Hong Kong Exchanges has the basic conditions for recovery in capital market system construction and innovation, supported by a series of mutual access policies. It anticipates that the liquidity of the Hong Kong stock market will gradually increase, leading to a recovery in overall market activity and valuation [4][6]. Summary by Relevant Sections Financial Performance - For the first three quarters of 2024, the company achieved revenue and other income of HKD 15.993 billion, a year-on-year increase of 2.13%. The net profit attributable to shareholders was HKD 9.270 billion, a year-on-year increase of 0.1% [4][5]. - In Q3 2024, the net profit attributable to shareholders increased by 6.50% quarter-on-quarter, while it slightly decreased by 0.32% year-on-year [4]. Revenue Breakdown - The revenue from trading and trading system usage fees, listing fees, settlement and clearing fees, custody and agency services fees, market data fees, and net investment income showed varying growth rates. The growth rates for these segments were +6.48%, -6.07%, +6.92%, -1.11%, -1.47%, and -4.09% respectively [4][5]. Market Activity - The average daily trading volume in the cash market increased by 5.3% year-on-year, while the average daily trading volume for the Shanghai-Hong Kong Stock Connect rose by 14.0% year-on-year, contributing to a 6.92% increase in settlement fee income [5]. - The average daily trading volume in the commodity market saw a significant increase of 25.0%, leading to a 39.1% growth in trading fees and system usage fees for the commodity segment [5]. Future Projections - The report projects that the company will achieve revenue and other income of HKD 22.447 billion, HKD 26.037 billion, and HKD 29.484 billion for the years 2024, 2025, and 2026 respectively. The net profit attributable to shareholders is expected to be HKD 13.371 billion, HKD 16.270 billion, and HKD 18.262 billion for the same years, with corresponding PE ratios of 29.55, 24.28, and 21.63 [4][6].

Investment Rating - The investment rating for the company is "Outperform the Market" [1] Core Insights - The company reported a revenue of 15.993 billion HKD for the first three quarters of 2024, representing a year-on-year increase of 2%, with a net profit of 9.270 billion HKD, which is a slight increase of 0.1% year-on-year. The growth is attributed to economic stimulus measures from mainland China and global central banks adopting monetary easing policies, leading to improved investment sentiment [4][10] - The average daily trading volume for the stock market has reached new highs, with the Northbound and Southbound trading of the Shanghai-Hong Kong Stock Connect averaging 123.3 billion HKD and 38.3 billion HKD respectively, showing increases of 14.0% and 19.3% year-on-year [4] - The company maintains a reasonable valuation range of 353.20 to 368.20 HKD, with estimated revenues for 2024, 2025, and 2026 projected at 22.917 billion HKD, 24.885 billion HKD, and 26.848 billion HKD respectively, reflecting year-on-year growth rates of 12%, 9%, and 8% [4][13] Summary by Sections Financial Performance - For Q3 2024, the company achieved revenue of 5.372 billion HKD, a year-on-year increase of 6%, while net profit was 3.145 billion HKD, up 7% year-on-year [4] - The return on equity (ROE) for the first three quarters was 18.2%, a decrease of 0.6 percentage points year-on-year [4] Trading Activity - The cash market segment generated revenue of 6.351 billion HKD, a year-on-year increase of 1.9%, accounting for 40% of total revenue. The average daily trading amount in the cash market increased by 3% to 113.3 billion HKD [4] - The derivatives market saw a record number of contracts traded, with a total of 1.516 million contracts in Q3, marking a 12% increase year-on-year [4] Project and Investment Income - The company’s project income for the first three quarters was 1.466 billion HKD, a year-on-year increase of 17.7%, with internal investment income of 1.408 billion HKD, reflecting a year-on-year increase of 19.6% [4] - The annualized investment return was 5.48%, an increase of 0.93 percentage points year-on-year [4] Valuation and Estimates - The estimated earnings per share (EPS) for 2024, 2025, and 2026 are projected to be 10.32 HKD, 11.22 HKD, and 12.07 HKD respectively, with corresponding price-to-earnings (PE) ratios of 34.2 to 35.7 for 2024 [10][13]

Investment Rating - The report maintains a "Buy" rating for Hong Kong Exchanges and Clearing Limited (0388.HK) with a target price of HKD 377.3, compared to the current price of HKD 314.8 [1]. Core Views - The report highlights that the Hong Kong Exchanges and Clearing Limited achieved a revenue of HKD 15.993 billion for the first three quarters of 2024, representing a year-on-year increase of 2.1%, and a net profit attributable to shareholders of HKD 9.270 billion, up 0.1% year-on-year [1]. - The report emphasizes the positive impact of increased market activity on trading and settlement fees, which have risen as a proportion of total revenue [1]. - The report notes that the trading fees for the cash segment reached HKD 2.196 billion, reflecting a year-on-year increase of 0.5%, indicating a recovery in trading activity [1]. Summary by Sections Financial Performance - For Q3 2024, the company reported revenue of HKD 5.372 billion, a year-on-year increase of 5.7%, and a net profit of HKD 3.145 billion, up 6.5% year-on-year [1]. - The average daily trading value of stock products on the exchange increased by 5% year-on-year to HKD 1,027 billion for the first three quarters, with a significant jump of 23% in Q3 [1]. Revenue Structure - The revenue structure shows that trading and transaction system usage fees, along with settlement and clearing fees, accounted for 56.6% of total revenue, an increase of 2.0 percentage points year-on-year [1]. - Listing fees from the exchange accounted for 6.8% of total revenue, down 0.6 percentage points year-on-year, while investment income netted 23.3% of total revenue, a decline of 1.5 percentage points [1]. Market Activity - The report indicates that the cash segment's trading fees have shown signs of recovery, with the average daily trading value in Q3 reaching HKD 1,072 billion, marking a significant increase [1]. - The report also highlights the positive effects of favorable policies from mainland China, which have boosted trading activity and the performance of the Hang Seng Index [1]. Investment Outlook - The report projects an increase in earnings per share (EPS) for 2024, 2025, and 2026, estimating EPS at HKD 9.84, HKD 10.78, and HKD 11.78 respectively, with corresponding price-to-earnings (PE) ratios of 32, 29, and 27 times [1]. - The report suggests that the company is well-positioned to benefit from improved market conditions and increased trading activity, particularly as the Federal Reserve's interest rate cuts may enhance market liquidity [1].

Investment Rating - The report maintains a "Buy" recommendation for Hong Kong Exchanges and Clearing Limited (0388.HK) [1] Core Views - The trading sentiment has improved, and there is a focus on performance and valuation recovery [1] - The company's total revenue for Q3 2024 was HKD 15.993 billion, a year-on-year increase of 2.13% [4] - The net profit attributable to shareholders for Q3 2024 was HKD 9.270 billion, reflecting a year-on-year increase of 0.05% [4] - The report highlights a significant rebound in the spot market trading volume in September, contributing to the positive performance [4][9] Financial Performance Summary - For the first three quarters of 2024, the net profit attributable to shareholders turned positive year-on-year, with a margin of 58.0% [4] - Revenue from the spot trading segment increased by 2% year-on-year, while the derivatives segment faced a 10% decline [4] - The average daily trading volume in the LME segment increased by 25% year-on-year, with trading fee income rising by 39% [9] - The report projects an increase in net profit for 2024, 2025, and 2026 to HKD 128 billion, HKD 133 billion, and HKD 139 billion respectively, with corresponding year-on-year changes of +8%, +4%, and +5% [9] Market Conditions - The Hang Seng Index saw a strong rebound in mid-September, increasing by 19.3% in Q3 2024 [4] - The average daily trading amount in the spot market reached HKD 169.2 billion in September, marking a peak since April 2022 [4] - The report notes that the IPO fundraising amount for the first nine months of 2024 was HKD 55.6 billion, a year-on-year increase of 123% [4] Future Outlook - The report emphasizes the importance of Hong Kong Exchanges as a key financial infrastructure connecting domestic and global markets, especially under the backdrop of policies promoting high-quality opening of the mainland capital market [9] - The anticipated optimization of the new listing application approval process by the Hong Kong Securities and Futures Commission is expected to enhance the attractiveness of the exchange [9]