HKEX 0388

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HKEx posts flat 2011 net profit, matching forecasts

HONG KONG, Feb 29 (Reuters) - Hong Kong Exchanges & Clearing Ltd (HKEx) <0388.HK>, the world's largest exchange operator by market value, posted a market-matching 1 percent rise in 2011 net profit as market turmoil weighed on new share sales and trading volume.

HKEx reported a net profit of HK$5.09 billion for 2011 in a statement on Wednesday. This was largely in line with the HK$5.12 billion that the 18 analysts polled by Thomson Reuters I/B/E/S were expecting, and flat from the HK$5.04 billion it recorded for 2010.

Source: Reuters

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Hong Kong Exchanges & Clearing (HKEx) faces a stiff contest to acquire the London Metal Exchange (LME), given the estimated value of up to 1.5 billion pounds ($2.43 billion), according to major investment banks.

HKEx would need to sell shares or borrow from banks to finance the purchase should its bid prove successful, analysts said.


Source: SOUTH CHINA MORNING POST

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Hong Kong Exchanges and Clearing Ltd, the operator of the Hong Kong stock exchange, confirmed on Monday its interest in the auction process for London Metal Exchange, which is estimated to be worth between 500 million and 1.5 billion pounds ($783 million-$2.4 billion).


Source: Reuters

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DJ MARKET TALK: SGX, HKEx To Benefit From Rise Of Derivatives - Macq

1024 [Dow Jones] Macquarie says share price performances of Asian exchanges are still very much equities market-driven, with short-term price trends driven by recent daily turnover and market confidence, but in the longer term (5-6 years), it favors exchanges that are able to differentiate themselves through a balance between equities and derivatives.

It expects Singapore Exchange (S68.SG) and HKEx (0388.HK) to benefit most from the structural growth story in derivatives over the long term, due to their market leadership in product innovation, technology and market access in Asia.

"Our bias is towards SGX, due to its geographical competitive advantage and first-to-market advantage in OTC clearing."

HKEx recovers 2.4% to HK$113.80.

Source: Dow Jones Newswire

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Hong Kong Exchange to Buy London Metal Exchange for $2.1 Billion By MARK SCOTT

Hong Kong Exchanges and Clearing agreed on Friday to buy the London Metal Exchange for £1.38 billion, or $2.14 billion, in another sign of Asia’s importance to the world’s commodities industry.

The Asian bourse, one of the world’s biggest financial exchanges based on market capitalization, outbid several American rivals for control of the 135-year-old London firm.

http://dealbook.nytimes.com/2012/06/15/ ... 1-billion/

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DJ MARKET TALK: HKEx's LME Buy A 'Costly Deal' - JPMorgan

0933 [Dow Jones] HKEx' (0388.HK) GBP1.388 billion buy of LME "is a costly deal," says JPMorgan; it says HKEx management emphasized the importance of the metals market for China and vice versa, and HKEx's role as an intermediary, but "this deal is purely to avoid marginalization of HKEx by adding a commodity business."

JPM says HKEx management said the deal will be accretive in year-three, but according to its calculations, the deal will likely be earnings-dilutive even assuming synergies, as post-synergy profits will be barely enough to fund the financing cost.

It adds, HKEx stated that dividend policy will not change for at least the next five years, but it believes that the current payout of 100% is not sustainable as debt will need to be repaid at some point in time.

Hence, the company will either have to cut the payout ratio or raise equity at some point in time in the future to pay the debt.

The house ends its note by saying, "we do not see a reason to own this stock now."

HKEx is up 0.3% at HK$112.70; the HSI gains 1.5%.


Source: Dow Jones Newswire

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DJ MARKET TALK: Goldman Cuts HKEx To Sell; Tips Long-Term De-Rating

0912 [Dow Jones] STOCK CALL: Goldman Sachs cuts HKEx (0388.HK) to Sell from Neutral, despite the recent price decline, as it thinks the market has not fully priced in "potential long-term de-rating" for the stock.

The house says beside near-term EPS dilution, the potential LME acquisition "could completely reshape HKEx's balance sheet:"

FY13 pro-forma ROE down to 31% from 51% assuming HK$6.6 billion equity financing; the deal would still be ROE dilutive into 2022, even if it realizes management guidance.

GS adds that HKEx's 2Q results are scheduled for early August, where it expects to see continued ROE/margin erosion, from higher cost/lower ADT (average daily turnover); it lowers HKEx's FY12-14 EPS forecasts by 4%-5% to factor in lower ADT assumptions (HK$59 billion/HK$70 billion/HK$77 billion), and cuts HKEx target to HK$93 (22X FY12 EPS) from HK$125 (28X previously).

HKEx is quoted 2.2% higher at HK$111.00 at pre-open.

Source: Dow Jones Newswire

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DJ MARKET TALK: CS Lowers HKEx Target To HK$95.00 From HK$100.00

1129 [Dow Jones] STOCK CALL: Credit Suisse lowers HKEx (0388.HK) target price to HK$95.00 from HK$100.00 and keeps the stock at Underperform.

The house trims HKEx's outer year earnings forecast by 5%, following another weak month of equity market turnover in June; it adds, derivative market activity also declined in June, after a strong May.

CS notes that in the cash market, average daily turnover in June fell 35% on-year, and highlights that the decline is due to lower velocity--down to 60% from 80%, as the HSI rose 4.4% in the month.

CS says its new target price implies 22X 12-month forward earnings (a little below 25X eight-year average).

"We see downside risk to our forecasts if markets remain weak." HKEx is down 0.6% a HK$107.10.


Source: Dow Jones Newswire

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DJ MARKET TALK: MS Cuts HKEx Target To HK$72 Vs HK$78; Underweight

1516 [Dow Jones] STOCK CALL: Morgan Stanley cuts HKEx (0388.HK) target price to HK$72.00 (likely the lowest among major brokers) from HK$78.00 and keeps the stock at Underweight.

It lowers its ADT assumption for 2012 to HK$52 billion and 2013 to HK$56 billion; "we were earlier hoping for a pickup in velocity in 2013.

However, given sluggish velocity, even when markets did well year-to-date, shows that we are wrong to use last 5 years as a benchmark.

In that period, velocity pickup was driven by strong markets and continued increase in revenues from mainland China stocks." MS says incrementally, growth coming from China to Hong Kong will likely remain lackluster;

In that backdrop, the better benchmark is 2000-2006 when velocity averaged 60%.

"In fact, it can go even lower if China allows foreigners easier access to Shanghai market." HKEx is up 0.4% at HK$103.40.


Source: Dow Jones & Company, Inc.

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Turnover has also been increasing ...

HKEX (00388.HK) once reclaims $125 with higher trading volume on LME strategic plan

The US$500 million convertible notes due 2017 issued by HKEX (00388.HK) will be listed for trading tomorrow.

Moreover, the bourse reportedly will outline the development framework for LME, including the plans to develop trading of iron ore, coking coal and jet fuels, and admit Chinese iron and copper traders as LME members.

The turnover of Hong Kong stocks broke above $70 billion last Thursday on the back of hot money inflow, making the third largest single-day turnover in the third quarter.

The stock, after consolidating at 250MA last Friday, regained uptrend on weakness and hit 5.5-month high at 125.2. It last jumped 2.6% to $124.5 on trading volume of 4.19 million shares.


Source: AAStocks Financial News