CAITONG SECURITIES·2024-06-16 03:02Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The trading activity has improved further, with the average daily turnover (ADT) for May reaching HKD 139.8 billion, representing a month-on-month increase of 24.5% and a year-on-year increase of 38.4% [2][8] - The company is expected to benefit from the optimization of interconnectivity mechanisms with mainland and emerging capital markets, maintaining its alpha advantage and offering high cost-effectiveness for medium to long-term investments [3][31] Market Environment - The Hong Kong stock market experienced a rise followed by a decline in May, with active trading [8] - The ADT for May was HKD 139.8 billion, with a daily turnover rate of 0.43%, reflecting a month-on-month increase of 0.07 percentage points [8][10] - Southbound trading saw a significant inflow, with a double-sided ADT of HKD 55.7 billion, up 46.1% month-on-month and 98.9% year-on-year [10][15] - The derivatives market also saw increased activity, with stock options ADV rising by 18.0% month-on-month [16] Macro Environment - The domestic economic fundamentals remain stable, with the manufacturing PMI for May at 49.5%, indicating a slight decline but still within the expansion range [22][24] - The U.S. Federal Reserve has shown caution regarding interest rate cuts, with predictions adjusted to one cut for the year [24][31] Investment Recommendations - The company is projected to achieve net profits of HKD 124.4 billion, HKD 129.3 billion, and HKD 139.8 billion for the years 2024, 2025, and 2026, respectively, with year-on-year growth rates of 4.9%, 3.9%, and 8.2% [3][31] - The current stock price corresponds to a PE ratio of 26.9x for 2024, which is below the historical average PE of 38.9x since 2018 [3][31]