Ping An Securities·2024-04-25 03:32Investment Rating - The report maintains a "Buy" recommendation for Hong Kong Exchanges and Clearing Limited (0388.HK) with a target price of HKD 239.00 [2][8]. Core Views - The company's performance is under pressure due to high base effects, with total revenue for Q1 2024 at HKD 5.201 billion, down 6.42% year-on-year, and net profit attributable to shareholders at HKD 2.970 billion, down 12.85% year-on-year [5][8]. - The report highlights the potential for better utilization of the connectivity functions between Hong Kong and mainland China, following recent regulatory measures aimed at enhancing cooperation [8]. Summary by Sections Financial Performance - Q1 2024 total revenue was HKD 5.201 billion, with a year-on-year decline of 6.42%. Net profit attributable to shareholders was HKD 2.970 billion, down 12.85% year-on-year. The net asset attributable to shareholders was HKD 49.475 billion, reflecting a year-on-year increase of 1.53% [5][8]. - Revenue breakdown shows declines in trading fees and related services, with trading fees down 7%, listing fees down 13%, and investment income down 13% [5][8]. Business Segments - The cash market segment faced challenges with a year-on-year decline in trading volume of 22%, while the derivatives segment saw a 6% increase in average daily trading volume [6][8]. - The commodities segment reported a significant increase in trading volume, with metal contracts showing a 31% year-on-year increase [8]. Future Outlook - The report projects a relatively resilient performance for the company, with net profit forecasts for 2024, 2025, and 2026 at HKD 12.1 billion, HKD 12.4 billion, and HKD 13.2 billion respectively, indicating year-on-year growth of 2% for 2024 and 2025, and 6% for 2026 [8][14]. - The anticipated expansion of the connectivity functions is expected to enhance the quality of assets in the Hong Kong market and improve liquidity [8].