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 company 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, which is a slight increase of 0.1% year-on-year [1]. - In Q3 2024, the company reported revenue of HKD 5.372 billion, up 5.7% year-on-year, and a net profit of HKD 3.145 billion, reflecting a year-on-year growth of 6.5% [1]. - The report emphasizes the recovery in trading activity driven by favorable market conditions, with trading fees and settlement fees increasing as a percentage of total revenue [1]. Summary by Sections Revenue Structure - The revenue sources of Hong Kong Exchanges include trading and trading system usage fees, settlement and clearing fees, listing fees, custody and agency services fees, investment income, and market data fees. For Q1-Q3 2024, trading system and 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]. - The average daily trading amount of equity securities products on the exchange reached HKD 1,027 billion, a year-on-year increase of 5%. In Q3, this figure surged by 23% to HKD 1,072 billion, indicating a significant uptick in trading activity [1]. Investment Income - Investment income netted HKD 3.728 billion in Q1-Q3 2024, down 4.1% year-on-year. The annualized investment yield for margin and clearing house funds decreased slightly to 1.61% [1]. - The report notes a strategic shift in the company's external investment portfolio, with a significant reduction in equity securities and an increase in government bonds and mortgage securities, aimed at stabilizing income [1]. Earnings Forecast - The report projects earnings per share (EPS) for 2024, 2025, and 2026 to be HKD 9.84, HKD 10.78, and HKD 11.78 respectively, with corresponding price-to-earnings (PE) ratios of 32, 29, and 27 times [2][3]. - The company is expected to benefit from improved market liquidity and favorable policies from mainland China, enhancing its role as a key connector between China and the global market [1].

Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for its performance relative to the market [3][10]. Core Insights - The company's performance in Q3 2024 showed a year-on-year increase of 7%, driven by improved liquidity and supportive policies, leading to record trading volumes in the Hong Kong stock market [3][4]. - Total revenue for the first nine months of 2024 reached HKD 159.9 billion, a 2% increase year-on-year, with net profit remaining stable at HKD 92.7 billion [3][4]. - The report highlights a significant increase in IPO fundraising, with Q3 2024 seeing a 391% quarter-on-quarter growth, attributed to major listings such as Midea Group [3][4]. Summary by Sections Financial Performance - For the first nine months of 2024, the company achieved total revenue of HKD 159.9 billion, up 2% year-on-year, and a net profit of HKD 92.7 billion, unchanged from the previous year [3][4]. - Q3 2024 net profit was HKD 31.5 billion, reflecting a 7% increase year-on-year [3]. Revenue Breakdown - The revenue contribution from trading and settlement fees increased to 56% in 9M24, up from 53% in 9M23, driven by a recovery in Average Daily Turnover (ADT) [3]. - Revenue from various segments for 9M24 included: - Spot trading: HKD 6.35 billion (+2%) - Equity securities and derivatives: HKD 4.52 billion (-10%) - Commodities: HKD 2.1 billion (+31%) - Data and connectivity: HKD 1.56 billion (+1%) - Company projects: HKD 1.47 billion (+18%) [3][4]. Market Trends - The report notes that the Hong Kong stock market's ADT reached historical highs, with significant contributions from both southbound and northbound trading [3]. - The report anticipates continued positive sentiment in the Hong Kong IPO market due to recent regulatory changes aimed at expediting the listing process [3][4]. Profitability Forecast - The company has adjusted its profit forecasts upward, expecting net profits of HKD 128 billion, HKD 139 billion, and HKD 151 billion for 2024, 2025, and 2026 respectively, reflecting year-on-year growth of 8%, 9%, and 8% [3][4].

Investment Rating - The investment rating for Hong Kong Exchanges and Clearing Limited (388 HK) is "Buy" with a target price of HKD 404.00 [1][4]. Core Views - The report indicates that the performance in Q3 2024 was supported by a recovery in trading volume, with revenue and net profit reaching HKD 5.37 billion and HKD 3.15 billion respectively, reflecting year-on-year increases of 5.7% and 6.5% [1]. - The average daily trading volume (ADT) for Q3 2024 was HKD 118.8 billion, showing a significant increase from the lowest point of HKD 95 billion in late August [1]. - The report anticipates continued high trading activity in October, with ADT potentially reaching historical highs, supported by expected interest rate cuts from the Federal Reserve [1][2]. Summary by Sections Trading Business - Q3 2024 saw a stable trading volume with an ADT of HKD 118.8 billion, slightly down from HKD 121.6 billion in Q2 2024. The derivatives and commodities markets experienced a decline, with LME ADV at 642,000 contracts and derivatives contract ADV at 1.482 million contracts [1]. - Interconnectivity revenue for Q3 2024 was HKD 581 million, with northbound and southbound ADT at RMB 1.103 billion and HKD 396 million respectively [1]. IPO Activity - The number of IPOs in Q3 2024 decreased to 15 from 18 in Q2 2024, but the total financing amount increased significantly to HKD 42.2 billion, primarily due to Midea Group's IPO [1]. Investment Performance - Total investment funds stood at HKD 226.8 billion in Q3 2024, with an overall investment return of 2.1%. The return on margin and clearing house funds decreased to 1.45%, while the company's fund return increased to 5.91% [2]. Earnings Forecast and Valuation - The forecast for net profit attributable to shareholders for 2024, 2025, and 2026 has been adjusted to HKD 12.5 billion, HKD 13.2 billion, and HKD 13.8 billion respectively. The target price remains at HKD 404, with the current stock price trading at 30.2x 2025E PE [2][3].

股 票 研 究 证 券 研 究 报 告 单季利润环比持平，期待 Q4 业绩释放 香港交易所(0388) [Table_Industry] 综合金融 [Table_Invest] 评级： 增持 ——香港交易所 2024 年三季报点评 | --- | --- | --- | --- | |----------|-------------------------------------|---------------------------|---------------------------| | | | | | | | [table_Authors] 刘欣琦 ( 分析师 ) | 吴浩东 ( 分析师 ) | 王思 玥 ( 研究助理 ) | | | 021-38676647 | 010-83939780 | 021-38031024 | | | liuxinqi@gtjas.com | wuhaodong029780@gtjas.com | wangsiyue028676@gtjas.com | | 登记编号 | S0880515050001 | S0880524070001 | S0880123070151 | ...

Investment Rating - The investment rating for Hong Kong Exchanges and Clearing Limited (00388) is "Buy" (maintained) [3]. Core Views - The report highlights that the company achieved a record high quarterly profit in Q3 2024, with expectations for further performance improvement as the market recovers [3][5]. - The total revenue and other income for the first three quarters of 2024 reached HKD 15.993 billion, a year-on-year increase of 2%, while the net profit attributable to shareholders was HKD 9.27 billion, remaining flat compared to the previous year [2][5]. Summary by Sections Financial Performance - In Q3 2024, the company reported revenue and other income of HKD 5.372 billion, a year-on-year increase of 6% but a quarter-on-quarter decrease of 1%. The net profit for the quarter was HKD 3.145 billion, reflecting a year-on-year increase of 7% and flat compared to the previous quarter [2][5]. - The company’s trading and settlement fees increased due to a rise in average daily trading volume (ADT) in the cash, derivatives, and commodities markets [5]. Segment Performance - Trading and trading system usage fees for the first three quarters of 2024 amounted to HKD 4.979 billion, up 6% year-on-year, driven by improved trading activity due to economic stimulus policies [5]. - Investment income for the first three quarters was HKD 3.728 billion, a decrease of 4% year-on-year, primarily due to reduced investment income from margin and settlement funds [5]. Market Outlook - The report indicates a recovery in market trading activity, with the cash market ADT reaching HKD 113.3 billion for the first three quarters, a year-on-year increase of 3% [5]. - The IPO market showed signs of recovery, with 42 companies listed on the main board in the first three quarters, raising HKD 55.6 billion, a year-on-year increase of 126% [5]. Earnings Forecast and Valuation - The company is expected to achieve total revenues of HKD 21.927 billion, HKD 23.768 billion, and HKD 26.393 billion for 2024, 2025, and 2026 respectively, with year-on-year growth rates of 7%, 8%, and 11% [5][6]. - The net profit attributable to shareholders is projected to be HKD 12.398 billion, HKD 12.980 billion, and HKD 14.324 billion for the same years, with growth rates of 5% for both 2024 and 2025, and 10% for 2026 [5][6].

Investment Rating - The investment rating for Hong Kong Exchanges and Clearing Limited (00388.HK) is "Buy" (maintained) [1]. Core Views - The report highlights a recovery in spot trading sentiment, suggesting potential for performance improvement and valuation rebound, referred to as a "Davis Double" [4]. - The company's revenue and net profit for the first three quarters of 2024 were HKD 159.9 billion and HKD 92.7 billion, respectively, showing a year-on-year increase of 2% and flat growth [4]. - The report anticipates a recovery in trading activity driven by domestic growth policies and global interest rate cuts, which could lead to improved performance and valuation for the exchange [4]. Financial Summary - Revenue and net profit projections for 2024-2026 have been adjusted upwards to HKD 127 billion, HKD 140 billion, and HKD 153 billion, respectively, reflecting year-on-year growth of 6.8%, 10.6%, and 9.1% [4]. - The expected earnings per share (EPS) for 2024-2026 are HKD 10.0, HKD 11.1, and HKD 12.1, with corresponding price-to-earnings (P/E) ratios of 31.1, 28.1, and 25.8 [4][5]. - The trading fee and settlement revenue showed a year-on-year increase of 7% and 9%, respectively, while IPO activities are gradually improving [4]. Market Conditions - The report emphasizes the cyclical improvement in trading sentiment due to global liquidity changes and domestic policy support, which is expected to enhance trading volumes in the Hong Kong market [4]. - The diversification strategy involving mutual market access, derivatives, and LME is yielding positive results, with a notable increase in IPO activities and market liquidity [4].

Investment Rating - The investment rating for Hong Kong Exchanges and Clearing Limited is "Buy" (maintained) [1] Core Views - The report highlights that the overall performance of Hong Kong Exchanges is stable with an increase in revenue and net profit for the first three quarters of 2024, with total revenue and other income rising by 2.13% year-on-year to HKD 15.993 billion and net profit attributable to shareholders increasing by 0.05% year-on-year to HKD 9.270 billion [1] - The report anticipates a significant uplift in trading volumes in the fourth quarter of 2024, driven by improved market sentiment and policy benefits [1] Summary by Sections Financial Performance - For Q1-Q3 2024, total revenue and net profit reached HKD 15.993 billion and HKD 9.270 billion respectively, marking the second-highest figures for the same period in history, only behind the record set in 2021 [1] - Revenue from various segments showed mixed results: cash market revenue increased by 2%, derivatives revenue decreased by 10%, commodities revenue surged by 31%, data and connectivity revenue grew by 1%, and company projects revenue rose by 18% [1] - The EBITDA for the segments varied, with cash market EBITDA slightly up by 0.2%, derivatives down by 15%, commodities up by 61%, data and connectivity stable, and company projects showing a significant decline [1] Market Activity - The report notes a recovery in trading sentiment in September 2024, with significant growth in the primary market, highlighted by the listing of Midea Group, which became the largest IPO in Asia for the first three quarters of 2024 [1] - The average daily turnover in the cash market for Q1-Q3 2024 increased by 5% year-on-year to HKD 102.7 billion, with northbound trading via Stock Connect seeing increases of 22% and 6% respectively [1] Profit Forecast and Valuation - The report has revised its profit forecasts upward, projecting net profits for 2024-2026 to be HKD 12.835 billion, HKD 13.946 billion, and HKD 14.888 billion respectively, with growth rates of 8.21%, 8.65%, and 6.76% [1] - The current market capitalization corresponds to P/E ratios of 30.80x, 28.35x, and 26.55x for the years 2024, 2025, and 2026 respectively [1]

Financial Performance - For the first nine months of 2024, the group's revenue and profit reached the second-highest record in history, with revenue of HKD 5.372 billion, a 6% increase from HKD 5.084 billion in the same period of 2023[2]. - In Q3 2024, total revenue and other income decreased by 1% to 5,372 million HKD compared to Q2 2024, with main business revenue down 4% to 4,852 million HKD[8]. - For the first three quarters of 2024, total revenue and other income reached 15,993 million HKD, a 2% increase from 15,659 million HKD in the same period of 2023[11]. - The company reported a shareholder profit of 3,145 million HKD in Q3 2024, remaining stable compared to Q2 2024[10]. - Total revenue and other income for the first three quarters of 2024 was HKD 16 billion, a 2% increase from the same period in 2023, attributed to increased trading and settlement fees[15]. - The profit attributable to shareholders for the nine months ended September 30, 2024, was HKD 9.270 billion, compared to HKD 9.265 billion in the same period of 2023[55]. - Total comprehensive income for the nine months ended September 30, 2024, was 9,517 million HKD, compared to 9,345 million HKD for the same period in 2023, reflecting an increase of 1.84%[56]. Trading Volume and Market Activity - The average daily trading volume of the Stock Connect (Shanghai and Shenzhen) reached a nine-month high, with an average daily trading amount of RMB 110.3 billion, up 4% from RMB 106.1 billion in the previous year[3]. - The average daily trading amount of the Hong Kong Stock Connect increased by 37% to HKD 39.6 billion, compared to HKD 29.0 billion in the same period last year[6]. - The average daily trading volume for equity securities on the exchange decreased by 4% to 107.2 billion HKD in Q3 2024 compared to Q2 2024[9]. - The average daily trading volume for derivatives increased by 18% to 11.6 billion HKD in Q3 2024 compared to Q2 2024[9]. - The average daily trading volume for the first three quarters of 2024 increased by 3% compared to the same period in 2023, with derivatives contracts up 12% and LME fee-paying metal contracts up 25%[14]. - The average daily trading volume for the LME fee-paying metal contracts reached a new high, reflecting strong market activity[14]. - The average daily trading volume for ETPs reached a nine-month high of RMB 154 billion, an 8% increase from RMB 142 billion in the first three quarters of 2023[22]. Investment Income - The company's net investment income increased by 41% to HKD 507 million, up from HKD 360 million in the third quarter of 2023[5]. - The net investment income from company funds increased by 39% to 507 million HKD in Q3 2024, up from 366 million HKD in Q2 2024[8]. - The net investment income from company funds rose by 20% to 1,408 million HKD in the first three quarters of 2024, compared to 1,177 million HKD in the same period of 2023[11]. - The total net investment income from margin and clearing house funds was HKD 2.32 billion in the first three quarters of 2024, down from HKD 2.71 billion in the same period of 2023[48]. Operating Expenses - Operating expenses decreased by 1% to 1,365 million HKD in Q3 2024, primarily due to reduced charitable donations, although professional fees increased[8]. - Operating expenses increased by 6% to 4,159 million HKD in the first three quarters of 2024, driven by higher employee and IT costs[11]. - Operating expenses rose to HKD 4.2 billion in the first three quarters of 2024, a 6% increase from the previous year, primarily due to higher employee costs and IT expenses[15]. - Operating expenses (excluding charitable donations) increased by 4% in the first three quarters of 2024, attributed to salary adjustments and strategic hiring[45]. Capital Expenditure - Capital expenditure increased by 26% to HKD 415 million, compared to HKD 329 million in the previous year[5]. - Capital expenditure for the first three quarters of 2024 was HKD 1.027 billion, compared to HKD 0.830 billion in the same period of 2023[50]. - As of September 30, 2024, the group's capital expenditure commitments amounted to HKD 1.506 billion, slightly down from HKD 1.555 billion on December 31, 2023[50]. Market Developments and Future Plans - The company successfully implemented measures to maintain normal trading in adverse weather conditions, reinforcing its position as a leading international trading and risk management center[2]. - The company plans to continue enhancing the vitality, resilience, and competitiveness of the Hong Kong market, focusing on product enrichment and international partnerships[2]. - The company plans to continue expanding its market presence and enhancing its technology infrastructure to support future growth[15]. - The Hong Kong Stock Exchange implemented measures to enhance market transparency and compliance culture during the third quarter of 2024[23]. Shareholder Information - The group does not intend to declare a dividend for the third quarter of 2024, consistent with the previous year[54]. - Basic earnings per share for the nine months ended September 30, 2024, was HKD 7.33, compared to HKD 7.32 in the same period of 2023[55]. Assets and Liabilities - The company's total assets reached 485,458 million HKD as of September 30, 2024, a significant increase from 341,179 million HKD as of December 31, 2023, representing a growth of 42.25%[57]. - The company’s liabilities totaled 434,334 million HKD as of September 30, 2024, up from 289,383 million HKD at the end of 2023, marking a rise of 50.14%[57]. - Cash and cash equivalents amounted to 227,757 million HKD as of September 30, 2024, compared to 125,107 million HKD at the end of 2023, showing an increase of 82.06%[57]. Compliance and Regulatory Matters - The consultation period for proposed amendments to the listing rules, aimed at aligning Hong Kong practices with global standards, ended on October 18, 2024[23]. - LME received 33 responses to its consultation on the EU Carbon Border Adjustment Mechanism (CBAM) and plans to require approved aluminum brands to report emissions data according to CBAM methods[37].

Investment Rating - The investment rating for the company is "Buy" (maintained) [4][6] Core Views - The company is expected to reach a quarterly performance peak in Q4 2024, with current valuations having returned to a safe margin [6][28] - The trading volume is anticipated to benefit directly from increased activity, while investment income remains high due to the lagging effect of margin investment returns relative to U.S. Federal Reserve rate cuts [28] Market Environment - The Hong Kong stock market experienced a reversal in late September, with trading activity significantly increasing [10] - As of the end of September 2024, the total market capitalization of listed securities on the Hong Kong Stock Exchange was HKD 36.92 trillion, reflecting a quarter-on-quarter increase of 16.2% [10] - The average daily trading (ADT) for September was HKD 1,692 billion, up 77.1% quarter-on-quarter [10][14] Performance Forecasts - For Q3 2024, the company is projected to have a single-quarter net profit of HKD 3.326 billion, representing a quarter-on-quarter increase of 5.4% and a year-on-year increase of 13.4% [26] - The total revenue and investment income for Q3 2024 is expected to be HKD 5.574 billion, with a quarter-on-quarter increase of 2.8% and a year-on-year increase of 10.1% [26] - For the first three quarters of 2024, total revenue and investment income are projected to be HKD 161.95 billion, with a year-on-year growth rate of 3.6% [26] Q4 Performance Elasticity - The company’s performance in Q4 2024 is expected to show high elasticity, with ADT reaching new highs since September 24 [5][26] - If ADT reaches HKD 4,000 billion, 3,000 billion, and 2,000 billion in Q4, the projected net profits for the year would be HKD 148.55 billion, HKD 141.58 billion, and HKD 134.62 billion respectively, with year-on-year growth rates of 25%, 19%, and 13% [5][27] Investment Recommendations - The company is recommended for investment due to the anticipated peak in quarterly performance and the current valuation being within a safe margin [6][28] - Projected net profits for 2024-2026 are HKD 134.62 billion, HKD 138.73 billion, and HKD 145.77 billion, with respective year-on-year growth rates of 13.5%, 3.1%, and 5.1% [6][28]

Investment Rating - Investment Rating: Buy (Maintain) [1] Core Views - The report highlights that the recent interest rate cuts by the Federal Reserve and supportive policies from the Chinese government are expected to catalyze a recovery in the Hong Kong stock market, benefiting the Hong Kong Stock Exchange (HKEX) [3][4] - The report anticipates a rebound in the average daily trading (ADT) volume for Hong Kong stocks, projecting ADT to reach HKD 1,117 billion in 2024, with further increases to HKD 1,324 billion in 2025 and HKD 1,529 billion in 2026 [3][4] - The forecast for net profit attributable to shareholders has been revised upwards for 2024-2026, with expected figures of HKD 124.7 billion, HKD 132.4 billion, and HKD 142.7 billion respectively, reflecting year-on-year growth of 5.2%, 6.2%, and 7.7% [3][4] Financial Summary - Revenue for 2024 is projected at HKD 21,536 million, with a year-on-year growth of 5.0% [4] - Net profit for 2024 is expected to be HKD 12,473 million, with a year-on-year increase of 5.2% [4] - The report indicates an EBITDA margin of 79.9% for 2024, with a net profit margin of 57.9% [4] - The earnings per share (EPS) for 2024 is forecasted to be HKD 9.8, with a price-to-earnings (P/E) ratio of 26.3 [4] - The report also notes that the total market capitalization of HKEX is HKD 3,329.34 billion, with a circulating market capitalization of the same amount [1][4]