Huachuang Securities·2026-02-27 07:42Investment Rating - The report maintains a "Buy" rating for Hong Kong Exchanges and Clearing Limited (0388.HK) with a target price of HKD 516.9 [2][9]. Core Insights - In 2025, Hong Kong Exchanges achieved a revenue of HKD 29.161 billion, representing a year-on-year increase of 30.3%, and a net profit attributable to shareholders of HKD 17.754 billion, up 36.0% year-on-year [2][10]. - The report highlights a significant increase in trading activity, with the average daily turnover in the cash market reaching HKD 249.8 billion, a 90% increase year-on-year, driven by renewed investor interest in Chinese assets and international capital inflow [3][4]. - The number of new listings in 2025 reached 119, an increase of 48 from the previous year, with total fundraising amounting to HKD 286.9 billion, a 227% increase year-on-year, positioning Hong Kong as a leading market for IPOs globally [4][9]. Summary by Sections Financial Performance - In Q4 2025, the company reported revenue of HKD 7.310 billion, a 14.6% increase year-on-year, and a net profit of HKD 4.335 billion, up 14.7% year-on-year [2]. - The revenue from the cash segment was HKD 14.704 billion, reflecting a 56.1% increase year-on-year, with trading fees and related services contributing significantly [3]. Market Activity - The report notes that the average daily turnover for the Stock Connect northbound and southbound trading increased by 42% and 151% respectively, indicating heightened market activity [3]. - The trading volume in the derivatives market also reached new highs, with an average daily contract volume of 1.6628 million contracts, a 7% increase from 2024 [9]. Revenue Structure - The revenue composition shows that trading and transaction system usage fees, along with settlement and custody fees, accounted for 64.7% of total revenue, an increase of 6.4 percentage points year-on-year [8]. - Investment income netted HKD 5.111 billion, a 3.7% increase year-on-year, with a notable rise in the scale of margin and settlement fund investments [9]. Future Outlook - The report anticipates continued growth in 2026, with projected earnings per share (EPS) of HKD 14.77, reflecting a strong market position and the potential for further capital inflow into Hong Kong [9][10]. - The company is expected to enhance its liquidity pool and market efficiency, focusing on developing a diversified asset ecosystem [9].