Q3's overall performance was basically stable, with growth in the main business and a decline in investment, in line with expectations of a slight decline in year-on-year results: benefiting from the increase in core average daily turnover (ADT) to HK $165.3 billion (+ 17%), the group's main business was about HK $5.2 billion (+ 5%), but the company's capital investment income fell to HK $30 million (- 89%), offsetting the growth in the main business, with total revenue of about HK $5.3 billion (0%). At the same time, major business operating expenses increased slightly to HK $1.1 billion (+ 2 per cent), totaling HK $1.1 billion (+ 1 per cent). In the end, the main business EBITDA increased by 6% year-on-year, while the total EBITDA remained unchanged. The corresponding main business net profit was about HK $3.2 billion (+ 5%), and the total homing net profit was about HK $3.2 billion (- 3%). Month-on-month performance growth: ADT increased by 9% month-on-month, major business income increased by 11%, a total increase of 7%, corresponding to the main business return net profit increased by 24%, a total increase of 17%.
Performance analysis: daily transaction volume is stable, the main business maintains prosperity in the same period, main business: (1) spot segment: equity securities ADT about HK $159.6 billion (year-on-year + 49%), northbound ADT about HK $123.2 billion (+ 37%), southward ADT about HK $46.2 billion (+ 99%), segment total revenue about HK $1.6 billion (+ 17%), of which Q3 trading volume and performance growth rate is lower than that of Q2 (2) the income of the derivatives segment is about HK $860 million (+ 3%), and the growth rate of Q3 trading volume and performance has changed from negative to positive; (3) the total income of the commodity segment is about 380 million Hong Kong dollars (+ 5%), and the growth rate of Q3 trading volume and performance is stable; (4) the income of the business segment after trading is about 2.1 billion Hong Kong dollars (- 2%), the year-on-year growth rate has changed from positive to negative. In terms of investment business, the average annualized rate of return on margin continued to decline, from 0.41% in Q1 to 0.31% in Q2 and 0.24% in Q3, resulting in a decline in net investment income. (5) the income of the science and technology segment is about HK $260 million (+ 18%), and the growth rate of Q3 is basically the same as that of Q2.
Investment advice: maintain the target price of HK $574, maintain the "overweight" rating we maintain the target price and maintain the "overweight" rating: (1) with the continued prosperity of equity and bond business, the group's derivatives business is expected to enter the fast lane of development; (2) with the mainland government gradually strengthening the supervision of overseas listings, Hong Kong Exchanges and Clearing's listing activities are expected to continue to prosper. We maintain our profit forecast and estimate that the EPS from 2021 to 2023 will be about HK $11.26, 13.78, 16.50, respectively, maintaining a target multiple of 51 times PE, corresponding to a target price of HK $574 for 2021.
Risk tips: regulatory policy risk, monetary policy risk, etc.