Event: Hong Kong Exchanges and Clearing 22Q1 realized income and other income of HK $4.69 billion,-21% year-on-year; net profit of HK $2.67 billion,-31% year-on-year, in line with expectations.
The recovery of trading promotes the recovery of performance, and investment is a drag on performance.
Hong Kong Exchanges and Clearing 22Q1 realized operating income (including all investment income) / return net profit of HK $46.9 / 2.67 billion, compared with the same period last year. Of this total, the income from the main business (excluding all investment income) is HK $4.6 billion, which is-16% compared with the same period last year. Investment income (customer capital + self-owned capital) HK $60 million, year-on-year / month-on-month ratio-86% Universe 84%. This report changes the mode of income collection and expenditure, classifying the investment income of the client's funds as the main business income, and the investment income is only listed as part of the company's funds.
The ADT inflection point of all kinds of 22Q1 assets has appeared. Q1 single-quarter ADT reversed the decline trend of HK $ADT1465 billion on the Stock Exchange of 22Q1, with a year-on-year / month-on-month growth rate of-35% and 16%. Among them, the spot stock growth rate was significantly warmer, the spot ADT growth rate of stocks was-36% / month-on-month growth rate of 26%, and derivatives ADT growth rate of year-on-year / month-on-month was-22% and 22%. The performance of the futures exchange was strong, and the increase brought about by the expansion of MSCI was obvious. The number of daily transactions was 705000, with a year-on-year / month-on-month ratio of + 21% and 40%. LME reversed the downward trend of ADT, with a daily turnover growth rate of + 10% compared with the same period last year.
Volatility in the equity market sharply lowered the investment income of its own funds, dragging down the overall performance 22Q1 investment income of HK $60 million,-86 per cent year-on-year. Among them, the net investment income from customer margin is 163 million yuan,-18% year-on-year, the annualized investment return rate is + 0.26%, year-on-year-0.12Pct; the self-owned capital investment loss is HK $104 million,-148% year-on-year, and the annualized investment return rate is-1.21%, year-on-year-3.77Pct. We expect the main reason is that the equity assets invested in the collective investment plan fell sharply in the first quarter.
Investment advice: the performance is low, and ADT is expected to improve along with the fundamentals of Hong Kong stocks. 21Q1 is the high point of HKEx's performance, and 22Q1 has ushered in the lowest growth rate compared with the same period last year. However, the month-on-month growth rate of all kinds of ADT has obviously warmed up. We judge that there may be a gradual recovery in the Hong Kong market after the second quarter, with significant improvements in the fundamentals of traditional financial, real estate and emerging technology sectors, and the HKEx ADT is expected to continue to recover after market sentiment returns to normal, and subsequent results and valuations are expected to have upward momentum. As a result of the continuing market downturn and geopolitical risks, we reduced the company's 2022-2024 net profit from HK $188.68 to HK $24.998 billion to HK $134.37 billion, which is + 7%, 14% and 15%, respectively, compared with the same period last year. The corresponding EPS is HK $10.6, HK $12.1 and HK $13.9 respectively. The current share price is 31.9 times PE at 22e, maintaining a "buy" rating.
Risk hints: capital markets fluctuate sharply; connectivity is not as expected; reform is not as expected