HKEX 0388

[winston]

not vested

Brokers Expect HKEX (00388.HK) to Earn 26%+ in 3Q23; Focus on Operating Guidance (Update)

HKEX (00388.HK) will announce its 3Q23 results this Friday (20th).

Although the average daily turnover of Hong Kong stocks in the quarter was only over $98 billion, the net investment income rose sharply YoY, benefiting from the high interest rate environment.

According to the forecasts of 5 brokers consolidated by our reporters, the 3Q23 net profit of HKEX will range between $2.757 billion to $2.942 billion, representing an increase of 21.8% to 30% over $2.263 billion in the same period in 2022, and a QoQ decrease of 5.1% and a YoY increase of 1.3% over the net profit of $2.904 billion in 2Q23.

The median was $2.859 billion, up 26.3% YoY.

Related News- M Stanley Expects HKEX 3Q Core Rev. to Remain Low, Earnings to be Supported by NII

Investors will be concerned about the Hong Kong government's plan to promote liquidity in Hong Kong stocks, and the latest operational and reform guidelines from the management of HKEX.
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Brokers│3Q23 Net Profit Forecast (HKD)│YoY Change
Nomura│2.942 billion│+30%
Morgan Stanley│2.934 billion│+29.7%
JPMorgan│2.859 billion│+26.3%
Goldman Sachs│2.76 billion│+22%
CICC│2.757 billion│+21.8%

Source: AAstocks.com

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

Hong Kong Exchanges and Clearing (388 HK)
October Headline ADT Slumped To Lowest Level In Four Years

October headline ADT plunged 12.7% mom to HK$78.8b mainly due to weak investor sentiment as concerns over the economic recovery momentum persisted.

Although November ADT rebounded 14.4% after the levy cut announcement, it still remains below
the HK$100b level.

Nonetheless, we still expect the potential year-end rally and earlier rate cut bets to contribute to improved ADT and stock price performance. Maintain BUY.
Target price: HK$370.00.

Downside risks:
a) Sluggish headline ADT and IPO market and
b) one-off legal provision from LME nickel lawsuit.

Source: UOBKH

https://research.uobkayhian.com/content ... b2ae446fc0

[winston]

not vested

BofAS Expects HKEX (00388.HK) to See Solid NP Growth Next Yr, Keeps Buy Rating

BofA Securities released a report, expecting the net profit of HKEX (00388.HK) this year to grow by more than 20% YoY, mainly due to interest income driving its revenue growth in a high interest rate environment.

However, market turnover in the first nine months of this year fell 13% YoY due to high interest rates, as well as geopolitical and macro concerns.

In addition, the broker believed the Hong Kong market does need some major reforms to address liquidity issues.

The lack of large initial public offerings (IPOs) also remained a key issue, especially for technology companies.

Related News - UBS Adds HKEX (00388.HK) TP to $296, Rating Kept Neutral

However, with HKEX Chairperson Laura Cha's term of office due to expire in April 2024, the broker believed it is less likely for there to be any major reforms to the HKEX next year during the transition period.

Looking ahead, BofAS expected HKEX's interest income contribution to continue to drive its revenues, with solid net profit growth of 9% YoY and a return on equity of 24.6%.

Based on HKEX's strong profitability and healthy balance sheet, the broker maintained a Buy rating on the group, with a target price of $338.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

not vested

HKEX boosts dividend as net surges 18pc

by Cici Shi

Net profit rose 18 percent to HK$11.86 billion in 2023 from a year earlier despite a disappointing fourth-quarter amid a sluggish market.

Net profit in the fourth quarter shrunk by 12.8 percent year-on-year.

Revenue and other income for 2023 increased 11.16 percent to HK$20.52 billion and net investment income was 2.6 times higher than the previous year.

Average daily turnover on the stock exchange narrowed 16 percent to HK$105 billion, while trading fees and trading tariffs fell 18 percent.

The volume and turnover of derivatives and exchange traded funds, and Northbound Bond Connect hit record highs.

Revenue and profit were pressured by the weak market in the fourth quarter. Revenue and other income dropped 7 percent year-on-year to HK$4.86 billion.

The average daily turnover slumped by 28 percent yearly to HK$91 billion.

Source: The Standard

https://www.thestandard.com.hk/section- ... urges-18pc

[winston]

vested

Results Analysis: Lacking catalyst for sustainable rebound

Downgrade to HOLD with new TP of HK$272 given persistently weak market sentiment

FY23 net profit rose 18% to HK$11.9bn, in line with market expectations

FY24/25F ADT slashed to HK$105bn/HK$117bn; investors’ risk appetite to remain low in lack of a strong catalyst in near term

Revise down FY24F earnings by 6% to reflect change in ADT forecast, partly offset by improvement in net investment income

Source: DBS

https://www.dbs.com/insightsdirect/comp ... ecid=18474

[winston]

not vested

Hong Kong Exchanges and Clearing (388 HK)

1Q24: Switching To Risk-on Mode With ADT Hitting A Trough; Upgrade To BUY

HKEX reported 1Q24 earnings of HK$2.97b, 6.7% ahead of our expectations.

The strong earnings beat was due to better external portfolio gains, higher LME trading fees and
lower D&A expenses, partly offset by higher opex.

We are now more optimistic about the bourse operator’s earnings outlook on an encouraging headline ADT recovery and resilient NII in a longer-than-expected high-rate environment.

Upgrade to BUY with a higher target price of HK$285.00.

Source: UOBKH

https://research.uobkayhian.com/content ... e=hs_email

[winston]

Hong Kong Exchanges & Clearing Limited (388 HK) - Favourable trends unfolding

We view HKEX as a beta play which should benefit from an increasing turnover and a potential revival of capital market activities, which could solidify an increase in long-term growth expectations.

HKEX remains in a unique position connecting mainland China with the world.

Share price has risen 20% quarter-to-date, outperforming Hang Seng Index by 8ppt.

The stock is trading at 27x forward price-to-earnings (P/E), which is at the low-end of the range over the past five years, with 23-24% return on equity (ROE), and offering 3.2% 2024 dividend yield.

Market sentiment and China macro are still key factors to watch.

We fine tune our fair value estimate to HKD355 with an ADT assumption of HKD116b in 2024.

BUY.

Source: OCBC

[winston]

<Research>CICC Forecasts HKEX (00388.HK) 2Q24 Earnings to Grow 7% YoY to $3.11B

HKEX (00388.HK) is due to announce its 2Q24 results in late August.

CICC noted in a report that it currently forecasted the exchange to report revenue of $5.41 billion, up 8% YoY and 4% QoQ.

Excluding investment income, revenue mainly related to handling fees is predicted to grow 9% to $4.12 billion, while quarterly earnings are forecasted to rise 7% YoY and 5% QoQ to $3.11 billion.

For 1H24, CICC estimated HKEX's revenue to be broadly flat YoY at $10.61 billion, while profit is expected to decline 4% YoY to $6.08 billion.

The broker predicted investment income to grow 6% YoY to $1.21 billion in 2Q, on the back of stable investment income from internal funds.

With the recent market recovery, the broker accordingly raised its profit forecasts on HKEX for 2024/25 by 3% and 2% to $12.6 billion and $13.6 billion respectively.

CICC maintained its Outperform rating on HKEX, with an unchanged target price of $310, corresponding to 31x and 29x P/E ratio for 2024 and 2025 respectively.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

not vested

Hong Kong Exchanges and Clearing (388 HK)
A Head Of Steam Or A Flash In The Pan?

June headline ADT declined 12% mom as the market turned cautious ahead of the third plenum meeting. Hence, we revised down our 2Q24 net profit growth forecast to 11% yoy.

While the upcoming minimum spread review is expected to boost the headline ADT in the long term, the outcome of the third plenum meeting and the upcoming Fed rate cut cycle are likely
to be the key near-term drivers of market sentiment and trading
turnover.

Maintain BUY. Target price: HK$310.00.

Source: UOBKH

https://research.uobkayhian.com/content ... e=hs_email

[winston]

not vested

HONG KONG EXCHANGES & CLEARING LIMITED (388 HK)

Recommendation : BUY
Fair Value : HKD 430.00

FAVOURABLE TRENDS UNFOLDING

Rebound in average daily turnover (ADT)
Other businesses and capital market activities are set to pick up
A beta play

The ADT has rebound sharply after Chinese policymakers and regulators announced a series of market stimulus measures together with a set of policies to support the economy last week.

The ADT surged to HKD389b over the past week and attained a record high level, making the year-to-date (YTD) ADT recover to HKD115b.

While the recent ADT level of about HKD389b would be challenging to sustain, we believe the market stimulus measures would revive trading volumes, paving the way for the recovery of other businesses and capital market activities, such as derivative volumes and IPO market.

We view HKEX as a beta play which should benefit from an increasing turnover and a potential revival of capital market activities, which could solidify an increase in long-term growth expectations.

HKEX remains in a unique position connecting mainland China with the world. Despite the recent share price rally, we believe the re-rating will be sustainable alongside with improving ADT.

We raise our ADT assumption to HKD150b, which is still at 10% discount to the previous peak in 2021.

During the previous market upcycle in 2020-2021, the stock traded at around 40x forward forward price-to-earnings (P/E).

The stock is currently trading at 35x forward P/E with 23-25% return on equity (ROE).

Market sentiment and China fiscal measures are key factors to watch. We lift our fair value estimate to HKD430.

Source: OCBC