Xingzheng International: Maintaining the Hong Kong Stock Exchange (00388) “Buy” Rating Record High in the First Three Quarters

The Zhitong Finance App learned that Xingzheng International released a research report stating that it maintains the “buy” rating of the Hong Kong Stock Exchange (00388) and advises investors to pay attention. In the first three quarters of 2026, the company's revenue and other revenue was HK$24.569 billion, up 12.4% year on year; profit attributable to shareholders was HK$15.427 billion, up 15.0% year on year, all of which reached a record high of nine months.

Xingzheng International's main views are as follows:

The cumulative performance for the first three quarters of 2026 reached a record high, and profit momentum in a single quarter slowed marginally in the third quarter

Revenue and other revenue: In the first three quarters of 2026, the company's revenue and other revenue was HK$24.569 billion, up 12.4% year on year; profit attributable to shareholders was HK$15.427 billion, up 15.0% year on year, all of which reached a record high of nine months. EBITDA for the same period was HK$19.610 billion, up 14.3% year on year; EBITDA profit margin was 80%, up 1 percentage point year on year.

In the third quarter of 2026, the company's revenue and other revenue was HK$7.867 billion, up 1.2% year on year and down 7.4% month on month; main business revenue of HK$7.467 billion, down 0.2% year on year and 4.1% month on month; profit attributable to shareholders was HK$4.859 billion, down 0.8% year on year and 9.7% month on month. The EBITDA margin was 79%, down 2 percentage points from year to month.

In the third quarter of 2026, the Group's revenue increased by HK$92 million year on year. During the period, the company's main business revenue decreased by HK$17 million year on year, and the company's net income from capital investment increased by HK$99 million year on year. The Group's revenue decreased by HK$632 million month-on-month from the second quarter to the third quarter of 2026, including a decrease of HK$322 million in main business revenue and a decrease of HK$289 million in the company's capital investment income.

Expenses and revenue quality: In the third quarter of 2026, the company's operating expenses were HK$1,600 billion, up 8.1% year over year. Among them, employee expenses increased by HK$76 million year on year, and IT costs increased by HK$23 million year on year. Together, these two accounts for about 83% of the year-on-year increase in operating expenses of HK$120 million. Group EBITDA declined slightly by 0.4% year over year. The net investment income of margin and clearing house funds for the first three quarters of 2026 was HK$2.104 billion, down 19% year on year, mainly driven by increased rebates from settlement participants; corporate capital investment income increased 11% year on year.

Trading differentiation: Shanghai-Hong Kong-Shenzhen Northbound and LME performed well

Spot market: The overall average daily turnover (ADT) of the Hong Kong Stock Exchange in the third quarter of 2026 was HK$254.2 billion, down 11% year on year and 12% month on month; Southbound Hong Kong Stock Connect ADT fell 30% year on year, which is significantly weaker than the 15% year-on-year increase of the Shanghai and Shenzhen Stock Connect Northbound ADT.

IPOs and refinancing: In the first nine months of 2026, HKEx's IPO raised HK$388.4 billion, ranking second in the world; in the third quarter of 2026, it raised HK$176 billion, up from HK$102 billion in the second quarter. In the first nine months of 2026, an additional HK$572.8 billion was raised after listing, an increase of 25% over the previous year. In the first three quarters of 2026, listing fees for the spot segment increased 35% year-on-year to HK$901 million.

Derivatives and LME: The commodity segment's revenue for the first three quarters of 2026 increased 28% year over year, LME fee trading average daily turnover (ADV) increased 16% year over year, while trading and settlement fees increased in early 2026. However, the company's 56% year-on-year increase in EBITDA in this segment was not a fully sustainable operating leverage: there was an FCA fine of HK$90 million in the same period in 2025, and the relevant insurance compensation of HK$24 million was received in the first three quarters of 2026. Revenue from the Data & Connectivity segment increased 10% year over year, network fees increased 11% year over year, and hosting service fees increased 13% year over year, less directly dependent on average daily spot transactions.

Risk Alerts

Shanghai-Hong Kong Stock Connect trading growth fell short of expectations; investment returns fluctuated due to capital market fluctuations; and the decline in trading activity in the Hong Kong, China market due to other external events.