Hong Kong Exchanges (0388.HK)_ Updating estimates for Oct volumes; Buy

Summary of Hong Kong Exchanges (0388.HK) Conference Call Company Overview - Company: Hong Kong Exchanges and Clearing Limited (HKEX) - Ticker: 0388.HK Key Points and Arguments - Earnings Estimates Revision: The earnings per share (EPS) estimates for HKEX for 2024, 2025, and 2026 have been revised by -0.1%, -0.2%, and +0.1% respectively, reflecting the disclosed trading volumes for October 2024 and the month-to-date (MTD) volumes for November [7][8] - Investment Thesis: The investment thesis remains unchanged with a "Buy" rating on HKEX. The 12-month target price is maintained at HK$395, which corresponds to a price-to-earnings (P/E) ratio of 39.5x for 2025 estimates [7][8] - **Market Capitalization**: The market capitalization of HKEX is reported at HK$413.3 billion (approximately $53.2 billion) [8] - **Revenue Forecasts**: Revenue estimates for the upcoming years are as follows: - 2024: HK$20,516 million - 2025: HK$22,493.7 million - 2026: HK$22,605.7 million - 2027: HK$23,439.9 million [8] - **EPS Estimates**: The new EPS estimates are: - 2024: HK$9.37 - 2025: HK$10.38 - 2026: HK$10.01 - 2027: HK$10.17 [8] - **Dividend Projections**: The projected dividends per share (DPS) are: - 2024: HK$8.41 - 2025: HK$9.35 - 2026: HK$9.01 - 2027: HK$9.16, resulting in a dividend yield of approximately 2.7% to 2.9% [8] Risks and Methodology - Downside Risks: The report identifies several risks that could impact HKEX's performance: 1. Increased competition from onshore capital markets 2. Reduced trading velocity in the cash market 3. Fee pressure due to lower fees onshore in China 4. A prolonged deflationary environment in China [7][8] - Valuation Methodology: The target price is derived using a three-stage Dividend Discount Model (DDM) [7][8] Additional Insights - Market Context: The report emphasizes the competitive landscape and potential challenges posed by domestic markets in China, which could affect HKEX's market share and profitability [7][8] - Analyst Ratings: Goldman Sachs maintains a "Buy" rating for HKEX, indicating a positive outlook based on the company's fundamentals and market position [7][8] This summary encapsulates the essential insights from the conference call regarding HKEX, highlighting the company's financial outlook, risks, and investment recommendations.