Dahua Jixian: Hong Kong Stock Exchange's fourth quarter performance strong, target price slightly raised to 552 Hong Kong dollars

Dahua Jixian has issued a research report stating that the performance of the Hong Kong Stock Exchange in the fourth quarter of last year was strong, benefiting from one-time gains in net interest income and appropriate cost control. The main business income during the period roughly met expectations, mainly driven by strong commodity trading and revenue growth from new IPOs. Quarterly net profit increased by 15% year-on-year to HK $4.3 billion, exceeding the bank's and market's expectations by 11% and 15% respectively. The second interim dividend was HK $6.52 per share, a 33% increase year-on-year, with a full-year dividend of HK $12.52, resulting in a payout ratio of 90%. Quarterly net investment income reached HK $1.2 billion, 55% higher than the bank's expectations. Since the beginning of the year, the daily average turnover has increased from HK $230 billion in the fourth quarter to HK $260 billion. The bank maintains a positive view on this year's daily average turnover, expecting further profit forecast upgrades to be a catalyst for valuation reassessment. Profit forecasts for this year and the next have been raised by 4.7% and 2.7% respectively, with full-year daily average turnover forecasts adjusted to HK $262 billion and HK $272 billion. The rating remains "Buy", with the target price raised slightly from HK $550 to HK $552, equivalent to a forecast P/E ratio of about 36 times in 2026.