Incident: 1H2024 HKEx revenue and other earnings were +0.4% to HK$10.621 billion YoY, while net profit to mother was -3.0% YoY to HK$6.125 billion. Among them, quarterly revenue and other earnings for the second quarter were +4.2% and +8.0% to HK$5.42 billion (we had previously estimated HK$5.48 billion), net profit to mother was +6.2% month-on-month, and +8.6% to HK$3.155 billion (we had previously estimated HK$3.23 billion), in line with our previous expectations.
The marginal trading activity of various types of assets improved markedly in the second quarter, and south-bound trading performed well. 1) In the spot market, the 2Q2024 Hong Kong Stock Exchange share capital stock ADT was +25.5% month-on-month and +23.1% to HK$111.8 billion; of these, southbound ADT was +42.3% month-on-month, and +46.5% to HK$44.1 billion; northbound ADT was -4.3%, and +3.9% to 127.3 billion yuan. 2) In the derivatives market, derivatives warrants, bull and bear warrants ADT -4.9% month-on-month, -18.3% to HK$9.8 billion; Futures Exchange derivatives ADV month-on-month, -4.3% year-on-year, +14.1% to 0.818 million shares; Stock Exchange stock options ADV was +15.8% month-on-month, and +24.7% to 0.747 million shares. 3) In the commodity market, LME product ADV was +10.8% month-on-month, and +27.2% to 0.73 million lots.
The IPO market showed signs of recovery but was still at an all-time low, and the number of new derivatives listings was steady.
2Q2024 had 18 newly listed companies on the Hong Kong Stock Exchange in a single quarter, with an IPO size of HK$8.6 billion, +79.2% and -23.2% month-on-year. The total number of derivative warrants listed on the Bull and Bear markets was -0.6% month-on-month, and +7.9% to 7,456.
Overseas interest rates are maintained, the company's own capital investment performance is excellent, and investment returns remain at a high level.
The 2Q2024 margin and clearing house fund's investment income for a single quarter was HK$0.813 billion, which is basically the same as the previous quarter. The estimated return on investment was -0.10pct, +0.16pct to 1.64%; the net return on investment of the company's capital was HK$0.366 billion, -31.6%, +36.6% month-on-month, and the estimated return on investment was -1.84pct, +1.19pct to 4.33% month-on-month.
Investment advice: As a core hub connecting Chinese and world capital, the Hong Kong Stock Exchange's absolute monopoly position and asset-light business model in Hong Kong, China still has significant alpha advantages, and the current medium- to long-term valuation is cost-effective. As of August 20, the Hong Kong Stock Exchange ADT is -4.6% YoY to HK$107 billion. We maintain our previous profit forecast. We expect HKEx's net profit to be HK$12.41, 12.9, and HK$14 billion respectively, +4.6%, +4.0% and +8.1% year-on-year respectively. The current stock price corresponds to 23.7×PE in 2024.
Risk warning: The Federal Reserve's interest rate cut was delayed; domestic economic recovery fell short of expectations; Hong Kong stocks were affected by the Black Swan incident.