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<Research>Guotai Junan Notes Pressure on HKEX's Investment Income; Rev. Growth From Rising Vitality of HK Stocks
Recommend 11 Positive 14 Negative 10 |
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Guotai Junan issued a research report on HKEX (00388.HK), maintaining its target price of $430 and Overweight rating. Guotai Junan believed that, with the announcement of cooperation measures with Hong Kong by the CSRC and the expectation that the US interest rate cut cycle will not change direction, the Hong Kong stock market is forecasted to become more active in investment and financing, which will drive HKEX's revenue growth. The broker maintained its 2024/25/26 earnings forecast on the group, expecting operating revenue to reach $22.2 billion, $24.3 billion and $26.9 billion, and net profit to reach $13.1 billion, $14.7 billion and $16.6 billion, respectively. According to Guotai Junan, HKEX's investment income fell to $1.342 billion in 1Q24, a YoY decline of 12.57%, mainly due to the contraction of margins as a result of the fall in contract prices. In 1Q24, the group's investment income dropped 12.57% YoY to $1.342 billion, of which investment income from margin funds and clearing house funds plummeted 18.15% YoY to $807 million. The decline was mainly due to a lower margin requirement, induced by lower contract prices in 1Q. With the lower requirement, clearing participants of the Hong Kong clearing houses and LME Clear would pay less, resulting in a lower average margin size. The average fund size of the Hong Kong clearing houses and LME Clear descended by 25.47% YoY to $18.46 billion. Against the backdrop of a YoY increase in USD interest rates, the net rate of return on margin and clearing house fund investments rose by 0.16 ppts YoY to 1.75%. AAStocks Financial News |
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