CICC: Maintaining the Hong Kong Stock Exchange (00388) “Outperform the Industry” rating and reducing the target price to HK$440

The Zhitong Finance App learned that CICC released a research report saying that maintaining the “outperforming industry” rating of the Hong Kong Stock Exchange (00388), it is expected that revenue for the third quarter will increase 6% year on year and remain flat to 5.41 billion yuan. After excluding investment income, main business revenue will increase 8% year on year, down 1% from month to month to 4.15 billion yuan, and profit will increase 7% year over year and remain flat to 3.15 billion yuan month on month. The target price was reduced by 8% to HK$440.

The bank believes that marginal easing of overseas liquidity and potential economic policies continue to be introduced or further catalyze Hong Kong stock trading sentiment and provide downside protection for the Hong Kong Stock Exchange's profits and valuations; in terms of upward space, the current trading of the Hong Kong Stock Exchange is 30 times ahead of the one-year P/E, and there is still plenty of room compared to the high valuation points during the past Hong Kong stock recovery period. Furthermore, judging from ADT's sensitivity, estimates will drive an increase in net profit of 8.6%. If ADT expectations continue, it will further open up the upward valuation space for the Hong Kong Stock Exchange.

The bank said that due to adjustments in transaction assumptions and tax policy changes in 2025, the bank lowered the Hong Kong Stock Exchange's 2024 and 2025 profit forecasts by 2% and 6%, respectively, to $13.1 billion and $14.3 billion.