Guolian Securities·2024-04-25 08:02Investment Rating - The report maintains a "Buy" rating for the company with a target price of 342 HKD, based on a 35X PE for 2024 [8][9]. Core Views - The company has demonstrated resilience in its performance, with expectations for gradual recovery in the market [4][5]. - The first quarter of 2024 saw a revenue decline of 6% year-on-year, but a 7% increase quarter-on-quarter, indicating potential for recovery [5][6]. - The decline in profits is attributed to reduced trading volumes and lower IPO activity, but strong performance in derivatives trading has partially offset these declines [5][6]. Financial Overview - In Q1 2024, the company reported total revenue and other income of 52.01 billion HKD, with a core business revenue of 47 billion HKD [4][5]. - EBITDA for the quarter was 37.1 billion HKD, reflecting a 12% year-on-year decrease [4][5]. - Net profit attributable to shareholders was 29.7 billion HKD, down 13% year-on-year but up 14% quarter-on-quarter [4][5]. Segment Performance - Trading and transaction system fees amounted to 15.8 billion HKD, a 7% decrease year-on-year due to lower trading volumes [6]. - Listing fees decreased by 13% year-on-year to 3.7 billion HKD, influenced by a reduction in the number of IPOs [6]. - Investment income was reported at 13.4 billion HKD, down 13% year-on-year, primarily due to reduced returns from external portfolios [6]. Market Performance - The cash market ADT for Q1 2024 was 994 billion HKD, a 22% decline year-on-year, while the Northbound ADT increased by 37% year-on-year [7]. - The IPO market saw a decrease in the number of new listings, with only 12 companies listed in Q1 2024, down from 18 in the same period last year [7]. - Despite the current market challenges, there is optimism for gradual recovery, supported by a healthy pipeline of 85 active IPO applications as of March 2024 [7].