HKEX(00388) 国信证券·2025-02-20 07:17Investment 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].