2025-04-30 02:07Investment Rating - The report maintains a Buy rating for HKEX with a target price of HKD411.00, unchanged from previous assessments, indicating a potential upside of 21.7% from the current share price of HKD337.80 [5][6][21]. Core Insights - HKEX announced the purchase of its permanent headquarters from Hong Kong Land for HKD6.3 billion, which includes enhancement works valued at HKD400 million for a total area of 147,025 sq. ft. The implied cost per square foot is HKD40,129 [2][11]. - The management indicated that the deal could be financed by reallocating their external investment portfolio, which may lead to a decline in net investment income by HKD217 million to HKD434 million. This could impact HKEX's net profit by 1.4% to 2.8% in 2025 [3][4]. - Despite the negative impact on investment income, the management views the purchase as a strategic commitment to enhance Hong Kong's status as a global financial center [4][11]. Financial Overview - For the fiscal year ending December 2024, total revenue is projected at HKD22.374 billion, with a growth rate of 9.1% year-on-year. By 2027, total revenue is expected to reach HKD27.554 billion [14]. - The earnings per share (EPS) for 2025 is estimated at HKD11.15, with a projected dividend yield of 3.0% [7][14]. - The report highlights a cost-to-income ratio of 27.2% for 2025, indicating operational efficiency [14]. Market Position - HKEX is positioned as a key platform connecting capital between Hong Kong and mainland China, benefiting from elevated average daily turnover (ADT) and improved initial public offering (IPO) flows [5][21]. - The report emphasizes HKEX's strategic role as a super-connector between global east and west, which is expected to drive long-term growth [4][5].