Investment Rating - The report maintains a "Strong Buy" investment rating for Hong Kong Exchanges and Clearing Limited (HKEX) with a target price of HKD 515.00, indicating a potential upside of 17% from the current price of HKD 441.2 [2][8]. Core Insights - The report highlights that HKEX achieved record half-year results in H1 2025, with total revenue of HKD 14.1 billion, a year-on-year increase of 33%, and net profit attributable to shareholders of HKD 8.5 billion, up 39% year-on-year [1][5]. - The report emphasizes strong trading activity in both the cash and derivatives markets, contributing to the revenue and profit growth [5][8]. - The report projects continued growth in net profit for HKEX, estimating HKD 16.6 billion, HKD 18.1 billion, and HKD 19.5 billion for the years 2025 to 2027, representing year-on-year growth rates of 27%, 9%, and 7% respectively [8]. Financial Performance Summary - H1 2025 financial highlights include: - Total revenue: HKD 14.1 billion, +33% YoY - Net profit: HKD 8.5 billion, +39% YoY - EBITDA: HKD 10.9 billion, +43% YoY, with an EBITDA margin of 79%, up 6 percentage points YoY [1][5][8]. - Revenue breakdown by business segment for H1 2025: - Cash market: HKD 6.7 billion, +62% YoY - Equity securities and financial derivatives: HKD 3.55 billion, +15% YoY - Other segments also showed positive growth [5][8]. Market Activity - The report notes that the cash market saw record trading volumes, with average daily turnover (ADT) reaching HKD 222.8 billion, a 122% increase YoY [5][6]. - The primary market experienced a strong momentum with 44 new listings in H1 2025, raising HKD 109.4 billion, which is more than eight times the amount raised in H1 2024 [8][34]. Valuation Metrics - The report provides projected financial metrics for HKEX: - Revenue growth forecast for 2025: HKD 27.8 billion, +24% YoY - Projected PE ratio for 2025: 22.23 [7][33]. - The report indicates a strong return on equity (ROE) of 25.1% and a book value per share of HKD 41.0 [2][7].