GUOTAI HAITONG SECURITIES·2026-02-28 01:33Investment Rating - The report maintains a "Buy" rating for Hong Kong Exchanges and Clearing Limited (HKEX) with a target price raised to HKD 502, corresponding to a 35x PE for 2025 [1][9]. Core Insights - The report highlights that HKEX's profits exceeded expectations in Q4 2025 due to sustained high trading activity in the Hong Kong stock market and growth in margin investment, which offset the decline in yield [2][9]. - The report anticipates continued growth in HKEX's long-term profitability driven by the expansion of the Hong Kong stock market and the broadening of its service boundaries, with ongoing IPO activity expected to enhance its revenue base [2][9]. Financial Summary - Total revenue for 2025 is projected at HKD 29,161 million, representing a year-on-year increase of 30.3%, while net profit is expected to reach HKD 17,754 million, up 36% from the previous year [4][10]. - The report provides a detailed breakdown of revenue sources for 2025, with significant contributions from spot trading (HKD 14.7 billion, +56% YoY), equity derivatives (HKD 6.9 billion, +11% YoY), and other segments [9][10]. - Investment income for 2025 is forecasted to be HKD 5.1 billion, reflecting a 4% increase YoY, driven by higher margin requirements and improved fund investment returns [9][10]. Growth Projections - The report projects net profits for 2026, 2027, and 2028 to be HKD 18.8 billion, HKD 19.7 billion, and HKD 20.7 billion, respectively, with growth rates of 6%, 5%, and 5% [9][10]. - The report emphasizes that HKEX's business model allows for long-term growth in line with the expansion of the Hong Kong stock market, which has historically maintained a revenue-to-market capitalization ratio of approximately 1.2% [9][10].