KAIYUAN SECURITIES·2024-04-25 06:02Investment Rating - The investment rating for Hong Kong Stock Exchange is "Buy" (maintained) [2][13]. Core Views - The company's diversified development strategy remains resilient, with a focus on positive policy catalysts in the Hong Kong stock market [2]. - The Q1 2024 performance showed a decline in revenue and net profit due to a high base effect and weak spot trading, but the diversified strategy is expected to yield benefits [2]. - The report highlights the importance of cyclical turning points, the effectiveness of the company's diversification strategy, and supportive policies for liquidity improvement [2]. Financial Performance Summary - Q1 2024 revenue and net profit were HKD 52.0 billion and HKD 29.7 billion, respectively, representing a year-on-year decline of 6% and 13%, but a quarter-on-quarter increase of 7% and 14% [2]. - The EBITDA margin and ROE were 72% and 24.2%, down by 4 percentage points and 3.5 percentage points year-on-year [2]. - The forecast for net profit for 2024-2026 has been adjusted to HKD 123.7 billion, HKD 131.9 billion, and HKD 142.2 billion, respectively, with corresponding EPS of HKD 9.8, HKD 10.4, and HKD 11.2 [2]. Business Segment Analysis - Trading and Settlement Business: Spot trading remains weak, but northbound trading and derivatives show resilience. Q1 2024 trading fees and settlement fees were HKD 15.8 billion and HKD 11.0 billion, with year-on-year changes of -12.7% and +2.5% [2]. - Investment Segment: Investment income was HKD 13.4 billion, down 12.6% year-on-year, primarily due to a decline in margin requirements [2]. - Listing and Other Income: Listing fees were HKD 3.7 billion, down 12.7% year-on-year, with a total of 12 IPOs in Q1 2024, a decrease of 33.3% [2]. Market and Policy Environment - The report emphasizes the cyclical recovery of the domestic economy and global liquidity, with expected benefits from supportive policies aimed at enhancing liquidity in the Hong Kong stock market [2]. - The China Securities Regulatory Commission has introduced measures to promote cooperation with Hong Kong's capital market, which is expected to enhance the liquidity and attractiveness of the Hong Kong Stock Exchange [6][7].