Main points of investment

The results of the first three quarters: 1-3Q revenue 16.218 billion yuan, year-on-year + 15%; return to the mother net profit 9.861 billion yuan, year-on-year + 15% cross EBITDA 12.771 billion yuan, year-on-year + 17% cross EBITDA profit margin 77%, net interest rate 61%, the same as the same period last year. Transaction fee / listing fee / settlement fee / deposit escrow and agent service fee / market data fee / net investment income / other income year-on-year + 19%, + 14%, + 26%, + 39%, + 9%,-37%, + 15%, respectively. Negative growth in net investment, a drag on performance. The revenue of post-transaction / spot / derivatives / commodities / technology segment accounts for 39%, 30%, 16%, 7%, 5%, and + 9%, 32%, 5%, 1%, 18%, 18%, respectively.

Q3 performance: Q321 main income 5.31 billion yuan, year-on-year + 10%, month-on-month + 12%, return to the mother net profit of 3.251 billion yuan, year-on-year-3%, month-on-month + 17%. The decline in net profit from the same period last year is also mainly affected by the decline in investment income. The spot business income is + 17% year-on-year, which is a good performance; the income from commodities and derivatives is 5% and-2% respectively compared with the same period last year, indicating that the activity of trading has decreased; and the deposit management in the post-transaction business, escrow and agent service fees are + 6% year-on-year and-26% compared with the same period last year, and the growth rate is not good.

Interconnection creates a Hong Kong Stock Exchange, with the share of revenue rising to 13%. 1-3Q equity securities ADT 159.6 billion yuan, Land Stock Tong ADT 123.2 billion yuan, Hong Kong Stock Connect ADT 4.62 billion yuan, year-on-year + 49%, + 37%, + 99%, the market is very active. During the period, a total of 73 new shares were listed in Hong Kong, raising 284.9 billion yuan, + 32% over the same period last year. Mainland enterprises are still actively listed in Hong Kong. The revenue of interconnection reached a record high of 2.094 billion yuan, + 55% compared with the same period last year, and the share of revenue increased to 12.91% (vs 9.61% in the same period last year).

Investment advice: the company's main business performed well in the first three quarters, but under the drag of investment income, the revenue and profit only reached our original forecast of 64.8% and 65.0%. Based on the disclosed data, we cut 2021-23e EPS11.39%, 12.27% and 12.65% to 10.54,11.98 and 13.05 yuan, respectively. Affected by the forecast downgrade, the target price derived based on DDM was lowered by 9.74% to 547 yuan, maintaining the "buy-A" rating.

Risk tips: the decline in market activity, the number of companies listed in Hong Kong and the scale of fund-raising are less than expected.