Guoxin Securities·2026-02-28 02:00Investment Rating - The investment rating for the company is "Outperform the Market" [6][24]. Core Views - The company is expected to achieve significant revenue growth driven by the active trading environment in the Hong Kong market, with projected revenue of HKD 29.16 billion in 2025, representing a year-on-year increase of 30.3% [1][8]. - The net profit attributable to shareholders is forecasted to reach HKD 17.75 billion in 2025, reflecting a 36.0% year-on-year growth, supported by a substantial increase in daily trading volume [1][8]. - The company's EBITDA margin has reached a historical high of 78.2%, and the annualized return on equity (ROE) is projected to be 31.7%, indicating strong operational efficiency and profitability [1][8]. Revenue and Profit Structure - The primary sources of revenue are trading fees and transaction system usage fees, which together accounted for 73.2% of total revenue in 2025 [2][8]. - The average daily turnover (ADT) in the cash market is expected to be HKD 2.315 trillion in 2025, a significant increase of 92.9% year-on-year, driven mainly by southbound capital inflows [2][13]. - Southbound trading accounted for 26.2% of the overall daily turnover in the Hong Kong stock market, highlighting its importance in driving market activity [2][13]. Strategic Initiatives - The company is focusing on deepening connectivity with mainland markets, optimizing and expanding the scope of the Stock Connect program, and exploring innovative business opportunities such as data connectivity [3][24]. - Efforts to enhance market vitality include reforms in listing rules to attract high-quality assets and diverse investors [3][24]. - The company is also investing in technology to upgrade trading and settlement platforms, which will support future business expansion [3][24]. Financial Forecasts - Revenue is projected to grow from HKD 22.37 billion in 2024 to HKD 37.60 billion by 2028, with a compound annual growth rate (CAGR) of approximately 9.6% [4][32]. - Net profit is expected to increase from HKD 13.05 billion in 2024 to HKD 23.44 billion by 2028, reflecting a strong growth trajectory [4][32]. - The company’s PE ratio is forecasted to decrease from 40.4 in 2024 to 22.5 by 2028, indicating an improving valuation as earnings grow [4][32].