Caitong Securities: Maintaining the Hong Kong Stock Exchange (00388) “Buy” rating in the fourth quarter is expected to usher in high quarterly results

The Zhitong Finance App learned that CaiTong Securities published a report stating that the net profit of the Hong Kong Stock Exchange (00388) is expected to be HK$134.62, 138.73, and HK$14.577 billion respectively. The current stock price corresponds to 30.4 x PE in 2023, which is within a safe margin and maintains a “buy” rating.

The main views of Caitong Securities are as follows:

High-frequency data on market transactions: Despite a reversal in market conditions in late September, the turnover of various assets declined month-on-month in the third quarter due to the previous market slump. The ADT for the Hong Kong Stock Exchange in 3Q2024 was HK$118.8 billion, -2.3%/+20.7% month-on-year; ADV for stock options was -5.7%/+19.2%, and ADV for futures options was 781,000, -5.5%/+4.9% month-over-year; and ADV for LME products was 643,000, -12.0%/+17.3% month-over-year.

Third quarter results forecast: Based on the above high-frequency market trading data, the bank expects the main business revenue of the Hong Kong Stock Exchange to be HK$4.197 billion in the 3Q2024 single quarter, -0.4%/+9.4% month-on-month; the 3Q2024 MSCI Global Index will cumulatively increase 2.35% (VS.3Q2023 down 3.81%), and the 3Q2024 Hang Seng Technology Index will increase by 33.69% (VS.3Q2023 up 0.24%). At the same time, the company's margin investment income compared to overseas interest rates Delayed. The bank's estimated return on investment (including margin) is HK$1,367 billion, +16.0%/+12.9% month-on-year, respectively. The total revenue and investment income of the Hong Kong Stock Exchange is estimated to be HK$5.574 billion, +2.8%/+10.1% month-on-year, and net profit to mother is HK$3,326 billion, or +13.4% month-on-year. In the first three quarters of 2024, the bank expects the total revenue and investment income of the Hong Kong Stock Exchange to be HK$16.195 billion, a year-on-year growth rate of +3.6%, and net profit to mother of HK$9.451 billion, +2.2% year-on-year.

Fourth quarter performance flexibility estimate: The Hong Kong Stock Exchange's performance for the fourth quarter of this year is expected to show high elasticity. Since September 24, Hong Kong stock turnover has repeatedly reached new highs. On 9/24-10/14, the HKEx ADT reached HK$362 billion. The daily turnover during this period reached a maximum of HK$620.7 billion. From October to now (10/14), the Hong Kong Stock Exchange ADT reached HK$369.2 billion. Due to the persistence or disagreement on the high activity of Hong Kong stocks, the bank made flexible calculations under the assumption that the Hong Kong Stock Exchange ADT would reach HK$4,000, 3000 and HK$200 billion respectively in the fourth quarter: if the ADT in the fourth quarter reached HK$4,000, 3000, and HK$200 billion, respectively, the full year of 2024, HKEx ADT would reach HK$1,850, 1600, and HK$135 billion respectively. The estimated net profit for the full year of 2024 reached HK$148.55, 141.58 and HK$13.462 billion, respectively. %. Net profit attributable to mother for the 4Q2024 single quarter reached HK$54.04, 47.08 and HK$4,011 billion respectively. The month-on-month growth rates were 63%, 42%, and 21%, respectively, and the year-on-year growth rates reached 106%, 80% and 53% respectively.

Risk warning: US interest rate cuts fell short of expectations; domestic economic recovery fell short of expectations; Hong Kong stocks were hit by the Black Swan incident.