HTSC·2024-10-24 04:03Investment 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].