According to the Cnstock APP, CICC released a research report stating a "buy" rating for hkex (00388), expecting revenue and other income to reach 22.447/26.037/29.484 billion Hong Kong dollars from 2024 to 2026, and a net income attributable to the mother of 13.371/16.27/18.262 billion Hong Kong dollars. With a series of policies supporting mutual market access, the bank believes that hkex has the fundamental conditions for recovery in the capital market system and self-innovation level. At the macro level, the Fed's rate cut has been implemented, and it is expected that the liquidity of the Hong Kong stock market will gradually rise, leading to a potential recovery in overall market activity and valuation.

Event: Hong Kong Exchanges and Clearing Limited releases the third-quarter report for 2024. The company achieved revenue and other income of 15.993 billion Hong Kong dollars in the first three quarters of 2024, up 2.13% year-on-year; achieved a net income attributable to the mother of 9.27 billion Hong Kong dollars, up 0.1% year-on-year.

Changjiang Securities' main points are as follows:

The company's performance is stable, with a strong performance in the third quarter of 2024.

In the first three quarters of 2024, hkex achieved revenue of 15.993 billion Hong Kong dollars, an increase of 2.13% year-on-year; a net income attributable to the mother of 9.27 billion Hong Kong dollars, an increase of 0.1% year-on-year. In the third quarter of 2024, the net income attributable to the mother was +6.50% quarter-on-quarter and -0.32% year-on-year. Looking at the fee model, in the first three quarters of 2024, the year-on-year growth rates of trading and trading system usage fees, listing fees on the exchange, settlement and clearing fees, custody and depository fees, market data fees, and investment net income were +6.48%, -6.07%, +6.92%, -1.11%, -1.47%, -4.09%, accounting for revenue proportions of 31.13%, 6.77%, 19.90%, 5.55%, 5.04%, 23.31% respectively. The growth in trading and trading system usage fees and settlement and clearing fees was due to increased trading activity in the spot and commodity divisions.

The commodity market ADT achieved high growth, and the trading activity in the spot market has slightly increased.

On the spot market front, in the first three quarters of 2024, the average daily turnover of HKEX stock capital securities increased by 5.3% year-on-year, and the average daily turnover of the Shanghai and Shenzhen Stock Connect increased by 14.0% year-on-year, leading to a 6.92% year-on-year growth in settlement fee income. Despite the rapid growth in turnover of the Shanghai and Shenzhen Stock Connect, due to a 30% reduction in A-share trading fees starting from August 28, 2023, and the impact of RMB depreciation, the trading fees for the Shanghai and Shenzhen Stock Connect decreased year-on-year, with total spot trading fees and trading system usage fees increasing slightly by 0.5% year-on-year. In the derivative market aspect, the trading fees and trading system usage fees for derivatives decreased by 0.6% year-on-year in the first three quarters of 2024, mainly due to the decrease in trading activity of HKEX derivative products. In the commodity market aspect, the average daily turnover of LME metal contracts increased by 25.0% year-on-year, leading to a 39.1% year-on-year growth in commodity segment trading fees and trading system usage fees.

Listing fees are under some pressure compared to the same period last year.

1)In terms of the spot market, the listing fees on the HKEX in the first three quarters of 2024 decreased by 3.0% year-on-year, mainly due to a reduction in IPO fees confiscated. 2)In the derivatives market, the listing fees on the HKEX for derivatives in the first three quarters of 2024 fell by 10.5% year-on-year to 0.426 billion Hong Kong dollars, mainly due to new listings.WarrantsandBull and bear certificatesthe number decreased compared to the previous year.

Both the scale and yield of margin and settlement fund have decreased, resulting in pressure on investment net income year-on-year.

In the first three quarters of 2024, the investment income from margin and settlement fund decreased by 14% year-on-year, with the average fund amount decreasing by 12.9% year-on-year, the year-on-year annual investment income rate decreasing by 0.02 percentage points to 1.61%, mainly due to the reduction in margin requirements leading to a decrease in scale, and the addition of interest rebates for some contract participants to attract trading volume.

Risk warning

1. Significant pullback in the equity market; 2. Delay in the expected reform of the listing system; 3. Slow progress in mutual market access; 4. Uncertainty in the US Federal Reserve policy.