The article "Post-Performance" summarizes the latest target prices and views of brokerages after the quarterly results are announced on the Hong Kong Stock Exchange

Hong Kong Exchanges and Clearing (00388.HK) announced its third-quarter results yesterday (5th), with net profit rising 56% year-on-year to HKD 4.9 billion, close to the upper limit of the forecast of HKD 4.994 billion from five brokerages. The stock price fell nearly 0.5% yesterday, but rebounded this morning (6th), reaching a high of HKD 433.4 during the session, up 2.3%. It closed at HKD 432.8, up 2.2%, with a turnover of HKD 1.524 billion. CICC indicated that the total revenue of Hong Kong Exchanges and Clearing rose 45% year-on-year (up 8% quarter-on-quarter) to HKD 7.775 billion, with the average daily turnover of southbound trading soaring 285% year-on-year (up 36% quarter-on-quarter), accounting for 26.6% of Hong Kong stocks. Excluding investment income, the main fee income rose 62% year-on-year (up 21% quarter-on-quarter) to HKD 6.71 billion, with profit rising 56% year-on-year (up 10% quarter-on-quarter) to HKD 4.9 billion, exceeding market expectations. This was mainly due to the rapid growth of various market-related businesses driven by active trading, while investment income also performed relatively steadily. The narrowing of interest margins and external investment redemptions dragged down the quarter-on-quarter performance of investment income, but the growth in margin volume supported the year-on-year performance. The bank rated Hong Kong Exchanges and Clearing as "outperforming the industry," with a target price of HKD 500.

Hong Kong Exchanges and Clearing reported earnings per share of HKD 3.88 for the third quarter of this year. Quarterly revenue and other income rose 45% year-on-year to HKD 7.775 billion, with main business income rising 54% year-on-year, driven by record high trading volumes in the spot market, leading to increased trading and settlement fees. Net investment income decreased by 49.9% to HKD 254 million, due to a decrease in fair value gains from externally managed investment funds and reduced returns from internally managed corporate funds. Operating expenses for the period rose 8% year-on-year, due to increased employee costs and information technology expenses. The EBITDA profit margin was 81%, up 7 percentage points year-on-year. The average daily trading amount on the exchange rose 1.41 times year-on-year to HKD 286.4 billion, with the average daily trading amount of equity securities products increasing 1.5 times to approximately HKD 267.9 billion, and the average daily trading amount of derivative warrants, bull-bear certificates, and warrants rising 59% to approximately HKD 18.5 billion.

【Strong Revenue Growth Expected】

JP Morgan stated that the strong performance of Hong Kong Exchanges and Clearing in the third quarter should lead the market to revise earnings forecasts upward. It also noted that the decline in Hong Kong Exchanges and Clearing's stock price in recent months was in line with the Hang Seng Index, rather than based on stable trading volumes, creating conditions for a sharp rise in stock prices in the coming months. The bank maintained an "overweight" rating on Hong Kong Exchanges and Clearing, with a target price of HKD 530. Morgan Stanley indicated that the net profit of Hong Kong Exchanges and Clearing rose 56%, exceeding the market's original expectation by 4%, but slightly lower than the bank's original expectation by 2%. With core revenue growth as expected, it reiterated its "overweight" rating and target price of HKD 508, equivalent to a projected price-to-earnings ratio of 35 times for next year.

UBS noted that the average daily turnover since the fourth quarter has risen 12% year-on-year, but investors are concerned that the average daily turnover in the last quarter may decline quarter-on-quarter (compared to the average daily turnover of HKD 286 billion in the third quarter of this year). The bank believes this is related to the suspension of southbound trading during the Golden Week holiday. It estimated that the annualized liquidity ratio for southbound investors remains around 3.1 times, compared to 1.3 times for non-southbound investors After deducting the impact of holidays, strong trading momentum is maintained. The bank indicated that as of the 4th of this month, there are still about 300 companies applying for listing, and the number of new listings is seen as an indicator of market sentiment, which is a major factor affecting the performance of HKEX's stock price. The bank lowered its target price for HKEX from HKD 485 to HKD 471, predicting a price-to-earnings ratio of 38 times, mainly reflecting the bank's latest view on the Federal Reserve's interest rate cuts, which are expected to be half a basis point this quarter and next year, and a quarter basis point cut in 2027. The investment rating for HKEX is "Neutral."

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This report summarizes the investment ratings and target prices from 6 brokerages, with 2 brokerages raising their target prices, 1 brokerage lowering its target price, and 5 brokerages giving "Buy," "Overweight," or "Outperform" ratings.

Brokerage│Investment Rating│Target Price

Goldman Sachs│Buy│HKD 544->562

JP Morgan│Overweight│HKD 530

Citi│Buy│HKD 510->515

Morgan Stanley│Overweight│HKD 508

CICC│Outperform│HKD 500

UBS│Neutral│HKD 485->471

Brokerage│Viewpoint

Goldman Sachs│Multiple factors driving further value reassessment, raising earnings per share estimates and target price

JP Morgan│Performance exceeds expectations, actual trend maintained

Citi│Raised earnings per share forecasts for this year and next by 1% to 2%

Morgan Stanley│Strong quarterly results, benefiting from robust core revenue growth in line with expectations

CICC│Strong fundamentals and valuation stagnation highlight opportunities for capital reallocation

UBS│Expects average daily trading volume in the fourth quarter to be affected by seasonality (southbound trading suspended during the Golden Week holiday)