CITIC Construction Investmentreleaseresearch reportSaid to maintain the “buy” rating of the Hong Kong Stock Exchange (00388), considering the overall transaction situation since 2022, based on the average market value of 46.8 trillion Hong Kong dollars, the annual turnover rate of 75.7%, the ADT of 142.8 billion Hong Kong dollars, and the derivatives ADV of 1.11 million copies, and under the assumption that the net investment income recovers to HK$2.2 billion, it is expected that the revenue in 2022 will increase by 0.5% year-on-year to HK$21.06 billion, attributable to the parent company.net profitIt increased by 0.8% year-on-year to HK$12.64 billion, with a target price of HK$500, corresponding to 50 times PE in 2022.
event:Company announces 21 years on February 24, 2022performancethe total revenue increased by 9% year-on-year to HK$20.95 billion. If investment income was excluded, the main business income increased by 10% year-on-year to HK$20.1 billion; EBITDA increased by 11% year-on-year to HK$16.27 billion, and the EBITDA rate was 77.7%;shareholderAttributable profit increased by 9% year-on-year to HK$12.54 billion, earnings per share were HK$9.91, and the annual dividend per share was HK$8.87, maintaining a dividend payout ratio of 90%.
CITIC Construction InvestmentThe main points are as follows:
Spot market: 21Q1 is the peak of the year, and it is still sluggish in 22 years, and it is expected to be under pressure in 22Q1
In 2021, the average daily transaction value (ADT) increased by 29% year-on-year to HK$166.7 billion, but for the whole year, the first quarter was the most active, with ADT reaching HK$224.4 billion, and the ADT in the fourth quarter was about HK$126.4 billion, down from the first quarter. 43.7%, the 21-year revenue of the spot market segment increased by 23% year-on-year to HK$6.13 billion. In the past 22 years, the transaction has continued to be relatively sluggish in 21Q4. The ADT in January was 128.59 billion Hong Kong dollars, +9.2% month-on-month and -47.7% year-on-year; in February, according to the tracking of daily data, the bank estimated that the ADT in February was 121.4 billion. Hong Kong dollar, -48% year-on-year.
From the overall market value of Hong Kong stocks,In December 21, it was 42.38 trillion Hong Kong dollars, down 10.6% from the 47.4 trillion Hong Kong dollars in December 2020. It has been more volatile in the past 22 years, and it was 41 trillion Hong Kong dollars on February 23. While the overall market was flat, the HKEx’s IPO pipeline remains strong, with 160 companies currently lining up. Therefore, under the background that the overall market value has not recovered significantly, and although the IPO has sufficient reserves, the release needs to be accelerated when the market improves. The bank expects that the company’s spot market performance will be under pressure in 22Q1.
The continued expansion of connectivity remains a bright spot.Shanghai-Shenzhen-Hong Kong Stock ConnectRevenue share increased to 13%
In 2021, northbound ADT will increase by 32% year-on-year to 120.1 billion yuan, and southbound ADT will increase by 71% year-on-year to HK$41.7 billion, thereby driving the income and other income of Shanghai-Shenzhen-Hong Kong Stock Connect to hit a new annual high of HK$2.724 billion, a year-on-year increase of 41%, accounting for than 13% of the company’s revenue. Among them, the transaction fee for northbound trading is HK$642 million, and the settlement fee is HK$999 million, which together account for 60% of the income of Shanghai-Shenzhen-Hong Kong Stock Connect. In addition to the spot market, Bond Connect has also continued to expand, with northbound ADT increasing by 34% year-on-year to RMB 26.6 billion.
Derivatives market: overall stable performance in 21 years, MSCIA50 interconnected growth is bright
In 2021, the average daily trading volume (ADV) of futures and options will increase by 3.25% year-on-year to 1.175 million contracts, and the average daily trading value of derivative warrants, CBBCs and warrants will increase by 8% year-on-year to HK$20.1 billion. The number of warrants and CBBCs increased by 38%/13%, respectively, driving the revenue of the derivatives segment to increase by 6% year-on-year to HK$3.44 billion.
MSCIA50 Connectivity Index Futures (hereinafter referred to as “MSCIA50”) was launched in October 2021 to date, and the number of single-day transactions has continued to hit new highs. , the highest in a single day has exceeded 65,000. The current trading fee waiver for MSCIA50 offered by the Hong Kong Stock Exchange will continue until the end of June 2022.The bank expects that under the volatile A-share market, the demand for hedging will rise, and the transaction of MSCIA50 will be more active.
Commodity markets are solid, with post-trade business benefiting from spot market activity but offset by investment gains
Average trading volume on the LME in 2021 will drop by 4%, resulting in a 2% year-on-year decrease in commodity market transaction fees, but market data fees and other income have increased, resulting in a 2% year-on-year increase in overall commodity segment revenue to HK$1.48 billion.In terms of post-trade business, settlement and custody fees, deposit and custody fees, etc. benefited from the development of the spot market, with year-on-year growth rates of 20% and 22% respectively, but the net investment income was affected by theinterest rateThe impact of the downside was down 57% year-on-year. On the whole, the post-transaction business increased by 5% year-on-year to HK$8 billion, and the EBITDA rate remained at 89%.
Investment advice: Hong Kong Stock Exchange continues to introduce policies to enhance the attractiveness of the platform, short-term market fluctuations, medium and long-term still positive
In 2021, the Hong Kong Stock Exchange will launch a number of policies and strategies,1) Continuously optimize the listing framework:Launched the Hong Kong SPAC system, and there are currently 7 submissions; optimize and simplify the listing system of overseas issuers, which is more conducive to the return of Chinese concept stocks and the dual listing of secondary listed companies;2) Expand interconnection:Included in the Shanghai Stock Exchange Science and Technology Innovation Board eligible A shares to enter Shanghai-Hong Kong Stock Connect; announced that Shanghai-Shenzhen-Hong Kong Stock Connect will soon join eligibleETF; Launch of Bond Connect Southbound;3) Continuous improvement of “product circle”:Launch MSCI China A50 Connectivity Index Futures, Hang Seng Technology Index Options, etc.; 4) Improve infrastructure and become more investor-friendly: FINI will be launched in Q4 of 2022 to shorten the IPO settlement cycle; launch a front-end monitoring risk management system; launch LME electronic warehouse Single handler, etc.
In addition, the HKEx and relevant departments are exploring the RMB”Stock Connect“feasibility.As the largest offshore trading platform for RMB, Hong Kong promotes and issues RMBsecuritiesand the implementation of the RMB “Hong Kong Stock Connect” will further the internationalization of the RMB. As an important and necessary platform and connector, the Hong Kong Stock Exchange will further enhance its status, and the increase in trading activity will also enhance its performance.
In the short term,The volatility of the Hong Kong stock market has a certain adverse impact on the company’s performance, but the US interest rate hike will helpcompany investmentThe increase in income, and historically, there is a certain inverse relationship between the company’s investment income and ADT, which may offset the decline in the transaction business in the overall income to a certain extent.In the medium term,The proportion of the market value of secondary listed companies in Hong Kong trading has continued to increase, the trend of the return of Chinese concept stocks has not changed, and the IPO reserves are sufficient. If the market recovers, there will be more room for endogenous and exogenous growth in the overall stock market value.In the long run,As an important and necessary connector for the gradual opening of China’s capital market, the HKEx has significantly benefited from the increase in China’s capitalization rate, the expansion of two-way opening and the internationalization of the RMB.
risk warning:The impact of the macro environment exceeded expectations, and the overall market value of Hong Kong did not recover as expected, which is a policy risk.
(Article source: Zhitong Financial Network)