Daiwa Capital Markets maintains a "Buy" rating on HKEX, raising the target price to HKD 552

Daiwa Capital Markets published a research report indicating that the Hong Kong Stock Exchange (00388.HK) performed strongly in the fourth quarter of last year, benefiting from one-time gains in net interest income and effective cost control. The main business revenue during the period was generally in line with expectations, primarily driven by strong commodity trading and revenue growth from new listings. Quarterly net profit grew by 15% year-on-year to HKD 4.3 billion, exceeding the bank's and market expectations by 11% and 15%, respectively. The second interim dividend was HKD 6.52 per share, a year-on-year increase of 33%, with a full-year dividend of HKD 12.52 and a payout ratio of 90%. Net investment income in the fourth quarter reached HKD 1.2 billion, 55% higher than the bank's expectations.

Year-to-date, the average daily trading volume has rebounded from HKD 230 billion in the fourth quarter to HKD 260 billion. Daiwa Capital Markets maintains a positive outlook on this year's average daily trading volume, expecting that further upward revisions to profit forecasts will serve as a catalyst for its valuation reassessment. The profit forecasts for this year and next year have been raised by 4.7% and 2.7%, respectively, with the full-year average daily trading volume forecast adjusted to HKD 262 billion and HKD 272 billion. The "Buy" rating is maintained, with the target price raised to HKD 552 (originally HKD 550), equivalent to a projected price-to-earnings ratio of about 36 times for 2026