HKEX(00388) 东吴证券·2024-06-12 10:31Investment Rating - The report maintains a "Buy" rating for Hong Kong Exchanges and Clearing Limited (HKEX) [48] Core Views - HKEX's revenue is primarily driven by stock trading volume, with investment income smoothing cyclical fluctuations [2] - The improvement in capital flows and trading sentiment in the Hong Kong market is expected to continue [23] - The expansion of high-quality listed companies is a key factor in elevating the trading volume and profitability of HKEX [34] Revenue Breakdown - Trading and settlement income account for 49% of HKEX's revenue, with stock trading being the decisive factor [6][8] - Investment income, which is highly correlated with interest rates, contributed 24% to revenue in 2023, growing by 266% YoY to HKD 4.959 billion [14] - Market data fees, which accounted for 5% of revenue in 2023, have significant growth potential compared to global peers [17] Understanding Beta (β) - The Hong Kong stock market has seen significant gains since February 2024, with the Hang Seng Index and Hang Seng Tech Index rising by 18.49% and 23.82% respectively [24] - Southbound capital inflows have surged, with net purchases of HKD 245 billion, HKD 859 billion, and HKD 804 billion in February, March, and April 2024 respectively [26] - Foreign capital inflows are expected to recover gradually, with international intermediaries' holdings increasing by 22% from January to May 2024 [28] Understanding Alpha (α) - The expansion of high-quality listed companies is essential for increasing trading volume and profitability [35] - Historical data shows that HKEX's profitability has been driven by waves of high-quality IPOs, such as the 2006 wave of mainland companies and the 2019 wave of US-listed Chinese companies returning to Hong Kong [37] - The Hong Kong market's low turnover rate, driven by institutional investors, leaves room for liquidity improvement through measures like reducing trading costs and introducing market makers [43] Investment Recommendation - HKEX is expected to achieve net profits of HKD 12.383 billion, HKD 13.558 billion, and HKD 14.486 billion in 2024, 2025, and 2026 respectively, with corresponding PE ratios of 27.75x, 25.34x, and 23.72x [48] - The current valuation of HKEX is below its historical average, with potential for further upside as trading volume and profitability improve [46]