HKEX 0388

[winston]

HKEx Q3 net falls 43%, hit by global sell-off

HONG KONG - Hong Kong Exchanges & Clearing (HKEx) , Asia's largest listed bourse operator, said on Wednesday its third-quarter earnings fell 43 per cent as a global stocks sell-off slashed daily turnover and saw new listings grind to a halt.

HKEx, which has the government as its largest shareholder, posted July-September net profit of HK$959.65 million (US$123.8 million), down from HK$1.68 billion a year earlier.

The third quarter figure was also lower than the second quarter's HK$1.32 billion.

Fourteen analysts polled by Reuters have estimated second-half net profit at HK$2.37 billion, down 38 per cent from a year earlier. They did not provide quarterly forecasts.

Trading activity is not expected to stabilise until well into 2009 as fears of a deep and prolonged global recession and extreme price volatility keep many investors away from financial markets.

Shares in HKEx fell 18.3 per cent in the quarter, in line with the decline in the broader Hang Seng Index, which suffered its worst quarterly loss since September 2001 as the global financial crisis heightened fears of recession. -- REUTERS

[winston]

Million Loss On Defaults By Lehman
Dow Jones
November 12, 2008: 05:27 AM EST

HONG KONG -(Dow Jones)- Hong Kong Exchanges & Clearing Ltd. (0388.HK), the operator of the city's stock and derivatives exchanges, said Wednesday it incurred a HK$157 million loss on defaults by Lehman Brothers Holdings Inc.'s ( LEH) Asian securities arm.

It said the loss was incurred by its wholly owned unit, Hong Kong Securities Clearing Co., on Sept. 16 when the city's securities regulator issued a restriction notice on Lehman and prohibited it from settling its outstanding securities transactions.

"We are in discussion with the Securities and Futures Commission on the way forward in order to avoid similar incident in the future," it said.

Hong Kong Exchanges reported earlier a 43% fall in its third-quarter net profit to HK$959.65 million from HK$1.68 billion a year earlier, as stock market turnover shrank.

[winston]

HKEx shares plunges 8.02 pct amid Q3 net fall

HONG KONG, Nov 13 (Reuters) - Shares of Asia's biggest listed bourse operator, Hong Kong Exchanges & Clearing (HKEx), dropped 8.02 percent on Thursday after it posted a 43 percent fall in quarterly profit, its second quarterly decline amid sluggish trading volumes.

The stock was set to open HK5.80 lower at HK$66.50.

BNP Paribas on Thursday cut its target price on HKEx by 28 percent to HK$49.32 and its earnings forecast by 9 percent for this year and 3-12 percent in 2009 and 2010.

HKEx posted July-September net profit of HK$959.65 million ($123.8 million), down from HK$1.68 billion a year earlier. The third quarter figure was also lower than the second quarter's HK$1.32 billion.

Trading activity is not expected to stabilise until well into 2009 as fears of a prolonged global recession and extreme price volatility keep many investors away from financial markets, analyts said.

[winston]

Targets slashed on HKEx
Katherine Ng

A disappointing third-quarter result from Hong Kong Exchanges and Clearing (0388) led analysts yesterday to slash its target price for the second time in two weeks, with one quoting a target on the stock of just HK$49.32.

Negative sentiment caused the stock to plunge 11.9 percent in intraday trading yesterday before recovering to close at HK$66.6.

The disappointing third-quarter result came only halfway through the market downturn, Goldman Sachs analyst Darwin Lam said. Goldman Sachs downgraded HKEx from "neutral" to "sell" and its target price from HK$126 to HK$52.

Lam said a recent rebound in turnover was founded on redemptions and would subside. "In down-cycles since the 1990s, turnover was typically muted for two years or more after the bull market ended," he added.

"A key negative feature of the third- quarter results was a 46 percent annual rise in operating expenses on the back of HK$157 million in provisions made for impairment losses on trade receivables from Lehman Brothers," said Citigroup analyst Bob Leung.

He explained that each HK$10 billion fall in turnover or 1,300-point decline in the Hang Seng Index would reduce its fair valuation of HKEx by 7 percent. Citi expects average daily turnover of HK$70 billion this year and HK$45 billion in 2009.

Dominic Chan at BNP Paribas was the most bearish on HKEx, cutting its target price 28 percent to HK$49.32, from HK$68.8 just two weeks ago. "We cut our earnings forecast by 9 percent for 2008 to reflect weaker-than- expected third-quarter results, and by 3 percent to 12 percent for 2009-10 on lower investment returns," he said.

[winston]

STOCK ALERT - Hong Kong Exchanges slumps as broker slashes target price

HONG KONG (XFN-ASIA) - Hong Kong Exchanges & Clearing Ltd was sharply lower after Morgan Stanley cut its target price for the bourse operator to 38 hkd from 75 and maintained an "underweight" call, citing lower market turnover estimates.

HKEx was down 5.5 hkd or 8.5 pct at 60.0, while the Hang Seng index was down 80.1 points or 0.6 pct at 13,455.67.

[winston]

Government takes $2.44b hit on HKEx
Katherine Ng

The Hong Kong government has lost as much as HK$2.44 billion on its holdings in Hong Kong Exchanges and Clearing (0388) since the Exchange Fund bought additional shares in the bourse operator last September.

HKEx plunged 7.5 percent yesterday to a two- year low of HK$60.55 after Morgan Stanley downgraded its target price more than 49 percent from HK$75 to HK$38 in the least optimistic judgment of any investment bank.

The stock has nosedived more than 60 percent since the government snapped up shares at an average price of HK$155.22 to increase its stake to 5.88 percent from 4.41 percent on September 7, 2007. HKEx peaked at HK$265.6 on November 2 last year and since then it has fallen by as much as 77 percent.

Morgan Stanley analyst Anil Agarwal said weaker earnings on lower turnover, investment income, data and listing fees were among its reasons for slashing the target price.

Morgan Stanley's most bullish assumption is for daily turnover on the Hong Kong exchange to average HK$47 billion a day in 2009, Agarwal said, even as other sources of revenue continue to decline.

Its most gloomy outlook was for turnover to average HK$15 billion a day as it did during the last bear market in 2004-2005.

"The stock is currently trading at 23 times 2009 earnings and our new target price implies a multiple of 14 times," said Agarwal.

Morgan Stanley maintained its "underperform" rating on HKEx.

The government would be a further HK$7.4 billion out of pocket if Morgan Stanley's target price for HKEx becomes a reality.

[winston]

From Dr. Check:-

To ride the current wave, you may want to consider Hong Kong Exchanges and Clearing (0388) as it will closely track or even outperform the index. HKEx's share price has dropped 81 percent from a high of HK$268.60 to a low of HK$49.70. Yesterday, it rose 16.26 percent to HK$71.50. Credit Suisse First Boston set a target of HK$40.

The best scenario is to buy near HK$67, targeting a rebound near its 100-day moving average (currently at HK$88.70). But don't forget, it's for short-term trading only.

[winston]

From UOB-Kay Hian:-

We cut our fair price for HKEx from HK$46.00 to HK$44.90 which is based on 17.5x 2009 PE. The market (on average) is expecting a net profit of HK$4.5b in 2009 (down only 10% yoy) which is still too high given that the ADT for 2008 is expected to be about HK$76b while ADT was only HK$61b in Sep-Nov 08.

ADT continues to decrease on mom basis. Velocity is unsustainable. We expect sustained downgrades to consensus earnings to exert downward pressure on the share price.

[millionairemind]

Stock Markets
December 30, 2008, 8.48 pm (Singapore time)

HKEx delays 'blackout' plan amid opposition

HONG KONG - Hong Kong's bourse operator, bowing to intense opposition from lawmakers and tycoons, decided to delay a ruling that would prevent directors from dealing in company shares for an extended period.

After a meeting on Tuesday of the listing committee of the Hong Kong Exchanges & Clearing Ltd (HKEx) to discuss opposition from members of the Legislative Council and local businessmen, the HKEx said the new ruling will be implemented on April 1, 2009, instead of Jan 1 as planned earlier.

'In particular, the listing committee notes that the scale of the change in the length of the blackout period has been perceived as dramatic and that the change has been introduced at too short notice,' the HKEx said in a statement.

'The listing committee will not be withdrawing the rule.'

The proposal would replace the current one-month blackout before results are announced and prohibit directors and key shareholders from dealing in shares for up to seven calendar months a year and up to nine if the company reports quarterly.

On Monday, 238 listed companies including tycoon Li Ka-shing's Cheung Kong Holdings, 22 individuals from major corporations and six business associations published an open letter in local newspapers opposing the new ruling.

They said the proposed extension of a share sale ban would damage the viability of the local stock market.

The rule change was first proposed in January 2008 and was approved by the local securities watchdog in November. -- REUTERS

[winston]

DJ MARKET TALK: Citigroup Downgrades HKEx To Sell From Buy

0905 [Dow Jones] STOCK CALL: Citigroup downgrades HKEx (0388.HK) to Sell from Buy after stock price's recent bounce of over 50% over past month and lack of actual increase in market velocity/ADT.

Cuts 2009 earnings forecast by 8%. But raises target to HK$67 vs HK$64 after rolling over DCF valuation to 2009. Notes currently, stock price implies an ADT of HK$50 billion to HK$55 billion, which unsustainable unless HSI rises above 16,000. Stock ended down 6.4% at HK$78.50 Thursday