UBS: Maintain HKEX "Neutral" rating with a lower target price of HK$261
UBS issued a research note, maintaining a "Neutral" rating on HKEX (00388), considering the market performance, it lowered the ADT (average daily turnover) forecast for 2024-2026 to Rmb110bn, Rmb1230bn and Rmb1370bn respectively, and the EPS (earnings per share) forecast was adjusted by 1%, 2% and 3% to Rmb9.7, Rmb9.9 and Rmb10.1 respectively, and the target price was reduced to HK$261 from HK$275.
The report said that HKEX is expected to announce its interim results on August 21, and the net profit after tax is expected to reach Rmb3.2bn in the second quarter of this year, up 10% YoY and 7% QoQ; the revenue is expected to reach Rmb55bn, up 11% YoY and 7% QoQ, the brokerage's revenue and profit forecast is consistent with the market expectation.
The brokerage estimates that HKEX's net investment income will grow 3% YoY to Rmb12bn in the next quarter, and will decline 12% YoY on a quarterly basis. For the full year, UBS currently forecasts revenue and net profit to reach Rmb217bn and Rmb123bn respectively, up 6% YoY and 4% YoY, slightly higher than the market's consensus forecast of 4% and 2% YoY growth. The ADT of HKEX is Rmb122bn in the next quarter, up 18% YoY and 22% QoQ, the best performance since the first quarter of last year, mainly driven by the market recovery from April to May.
However, UBS said that the ADT has slowed down from the high in May, and has fallen to about Rmb99bn since July, down from Rmb140bn in May. The ADT is expected to be flat YoY in the second half of this year and up YoY in the full year on a low base.