HKEX(00388) KAIYUAN SECURITIES·2024-10-23 15:08Investment 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].