If the ADTs of hkex in the fourth quarter reach 250 billion, 200 billion, and 150 billion Hong Kong dollars respectively, then the full-year ADTs of hkex in 2024 will reach 147.5 billion, 135 billion, and 122.5 billion Hong Kong dollars respectively.
According to the Wisdom Financial APP, CICC released a research report stating that it maintains a "buy" rating for hkex (00388). Assuming hkex ADT is 200 billion Hong Kong dollars in the fourth quarter, the forecasted attributable net incomes for 2024-2026 are 13.101 billion, 13.618 billion, and 14.432 billion Hong Kong dollars respectively. In 3Q2024, hkex's revenue and other income increased by +2% year-on-year to 15.993 billion Hong Kong dollars, with an attributable net income of 9.27 billion Hong Kong dollars, staying flat year-on-year. In this quarter, Q3 revenue and other income decreased by 1% compared to the previous quarter, and increased by 6% year-on-year to 53.72 billion Hong Kong dollars, with an attributable net income increasing by 0% quarter-on-quarter and 7% year-on-year to 3.145 billion Hong Kong dollars, in line with expectations.
The main views of Caitong Securities are as follows:
In terms of main revenue, the trading activity of various assets in Q3 decreased compared to the previous quarter but improved year-on-year.
1) Regarding the spot market, in 3Q2024, the single-season ADT of hkex decreased by 2% compared to the previous quarter but increased by 21% year-on-year to 118.8 billion Hong Kong dollars, with the ADT of southbound trades decreasing by 10% quarter-on-quarter and increasing by 37% year-on-year to 39.6 billion Hong Kong dollars. Northbound trades decreased by 13% quarter-on-quarter but increased by 4% year-on-year to 110.3 billion RMB. 2) In the derivative market, the ADV of the stock options of the HKEX increased by 5% quarter-on-quarter and 4% year-on-year to 0.778 million contracts; the ADV of the stock options of the SEHK decreased by 6% quarter-on-quarter and increased by 19% year-on-year to 0.705 million contracts. 3) In the commodities market, the LME commodity ADV decreased by 12% quarter-on-quarter but increased by 17% year-on-year to 0.642 million lots. Overall, the main operating income of hkex in 3Q2024 (excluding margin investment income) decreased by 2% quarter-on-quarter but increased by 8% year-on-year to 4.14 billion Hong Kong dollars.
Regarding investment income, the margin investment income was slightly lower than expected, mainly due to the decrease in margin trading requirements and increased interest returns. In 3Q2024, the single-season margin and clearing fund investment income was 0.7 billion Hong Kong dollars, a decrease of 14% quarter-on-quarter and 18% year-on-year. This was mainly due to the reduction in margin requirements leading to a decrease in the average investment size (average fund amount in the first three quarters decreased by 4% to 168.2 billion Hong Kong dollars compared to the previous two quarters), resulting in an investment return rate decrease of 0.19% quarter-on-quarter and 0.09% year-on-year to 1.45%. The interest returns given back to the clearing participants increased to stimulate the trading of certain products. The company's self-operated funds achieved a higher investment return in Q3, with a net investment income of 0.507 billion Hong Kong dollars, an increase of 39% quarter-on-quarter and 41% year-on-year. The calculated investment return rate increased by 1.58% quarter-on-quarter and 1.74% year-on-year to 5.91%.
The company's whole-body sales volume reached 18,000 kiloliters in 2023, a year-on-year increase of +28.10%, showing significant growth. In terms of product structure, the operating income of products worth 100-300 billion yuan was 4.01/12.88/0.06 billion yuan respectively.
Calculation of performance elasticity in the fourth quarter:
If the fourth-quarter ADT of HKEX reaches 250, 200, 150 billion Hong Kong dollars respectively, then the full-year ADT of HKEX in 2024 will reach 147.5, 135, 122.5 billion Hong Kong dollars respectively. The estimated full-year net income attributable to the mother in 2024 will reach 13.45, 13.101, 12.753 billion Hong Kong dollars respectively, with year-on-year growth rates of 13%, 10%, 8%, and the fourth quarter of 2024 single-quarter net income attributable to the mother reaching 4.18, 3.831, 3.483 billion Hong Kong dollars, with quarter-on-quarter growth rates of 33%, 22%, 11%, and year-on-year growth rates of 60%, 46%, 33%.
Risk warning: Unexpected interest rate cuts in the USA; slower-than-expected domestic economic recovery; unexpected black swan events affecting Hong Kong stocks.
