HKEX(00388) Soochow Securities·2024-10-23 13:11Investment 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]