Hong Kong Exchanges & Clearing (0388) AI Stock Analysis

• Market Cap: $529.96B
• Dividend Yield: 2.34%
• Average Volume (3M): 7.25M
• Price to Earnings (P/E): 37.4
• Beta (1Y): 1.55
• Revenue Growth: 19.20%
• EPS Growth: 24.01%
• Country: HK
• Employees: 2,444
• Sector: Financial
• Sector Strength: 79
• Industry: Financial - Data & Stock Exchanges
• EPS (TTM): 3.23
• Shares Outstanding: 1,267,836,900
• 10 Day Avg. Volume: 7,069,500
• 30 Day Avg. Volume: 7,246,713
• PEG Ratio: -2.15
• Price to Book (P/B): 8.58
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 31.21
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $436.69
• Price Target Upside: 3.19% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

• Rating: 76 Outperform
• Price Target: HK$456.00 ▲(7.75%Upside)

Hong Kong Exchanges & Clearing is fundamentally strong with robust financial performance, solid balance sheet, and efficient cash flow management. Technical indicators show bullish momentum, although caution is advised due to near overbought conditions. The stock appears expensive based on its P/E ratio, but growth prospects may justify the premium valuation.

Positive Factors

Earnings Potential

4QFY24 earnings rose 46% year-over-year, thanks to higher trading and clearing fees.

IPO Activity

Improving IPO activities and a lower HIBOR environment could attract more fund inflows and support market turnover.

Market Position

HKEx enjoys a strategic position as an Asian financial hub, connecting global investors to Mainland China through 'Connect' programs.

Negative Factors

Investment Income

Total revenue is forecasted to grow at a slower pace of 31% yoy, mainly weighed down by sluggish net investment income (-19.1%) on falling interest rates and reduced margin requirement.

Market Uncertainty

Despite the volume spike following the US tariff shock, such a high turnover velocity driven by market uncertainty is unlikely to continue, and headline ADT is expected to ease gradually as risk-off sentiment prevails.

Taxation Impact

Earnings growth will be weighted by higher effective tax rate, expected to exceed 15%, up from the three-year average of 12%, due to the introduction of the global minimum tax rate of 15% in 2025.

Hong Kong Exchanges & Clearing Business Overview & Revenue Model

Company Description

Hong Kong Exchanges and Clearing Limited, together with its subsidiaries, owns and operates stock exchanges and futures exchanges, and related clearing houses in Hong Kong, Mainland China, and the United Kingdom. It operates through five segments: Cash, Equity and Financial Derivatives, Commodities, Post Trade, and Technology. The Cash segment covers various equity products traded on the cash market platforms of the Stock Exchange of Hong Kong Limited, the Shanghai Stock Exchange, and the Shenzhen Stock Exchange; sale of market data relating to the products; and other related activities. The Equity and Financial Derivatives segment provides and maintains trading platforms for a range of equity and financial derivative products, such as stock and equity index futures and options, derivative warrants, and callable bull/bear contracts and warrants, as well as sells related market data. The Commodities segment operates an exchange for the trading of base, ferrous, and precious metals futures and options contracts in the United Kingdom; and operates Qianhai Mercantile Exchange Co., Ltd., a commodity trading platform in the Mainland. This segment also covers commodities contracts traded on Futures Exchange. The Post Trade segment operates clearing houses that are responsible for clearing, settlement, depository, custodian, and nominee services. The Technology segment offers various services that provide users with access to the platform and infrastructure. The company serves issuers and investors. Hong Kong Exchanges and Clearing Limited is based in Central, Hong Kong.

How the Company Makes Money

HKEX generates revenue through several key streams. The primary source of income is transaction fees, which are collected every time a trade is executed on its platforms. This includes trading fees from equities, derivatives, and commodities markets. Additionally, HKEX earns listing fees from companies that choose to list their shares on the Hong Kong Stock Exchange. Another significant revenue stream comes from clearing and settlement fees charged for processing trades through its clearinghouses. HKEX also benefits from market data fees, where it sells real-time market data and information to financial institutions and other market participants. Furthermore, the company has strategic partnerships and collaborations, such as the Shanghai-Hong Kong Stock Connect and the Shenzhen-Hong Kong Stock Connect, which enhance cross-border trading and attract international investors, contributing to its overall earnings.

Hong Kong Exchanges & Clearing Financial Statement Overview

Summary

Hong Kong Exchanges & Clearing demonstrates strong financial health across all statements. The company is achieving robust revenue and profit growth, maintaining a solid balance sheet, and generating substantial cash flow. While liabilities have increased, the overall risk is mitigated by high profitability and effective cash management. The company is well-positioned for future growth, supported by its efficient operational and financial strategies.

Income Statement

The income statement reflects strong growth and profitability. Gross profit margin is high, indicating efficient cost management. The net profit margin is robust, supported by a consistent increase in net income. Revenue growth has shown a positive trajectory, and both EBIT and EBITDA margins are healthy, signaling operational efficiency and strong earnings capability.

Balance Sheet

The balance sheet is solid with a low debt-to-equity ratio, indicating conservative leverage. The return on equity is strong, reflecting efficient use of shareholder capital. The equity ratio is stable, suggesting a balanced capital structure. However, the total liabilities have increased, which could pose a future risk if not managed properly.

Cash Flow

Cash flow analysis shows a strong operating cash flow to net income ratio, highlighting effective cash generation from operations. Free cash flow growth has been positive, supporting the company's ability to fund expansions and dividends. However, cash flow from financing activities is consistently negative, indicating high dividend payouts or debt repayments, which should be monitored.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	17.74B	17.35B	15.45B	16.93B	19.47B	16.84B
Gross Profit	14.20B	12.94B	11.46B	13.30B	15.66B	13.12B
EBITDA	14.40B	22.15B	14.95B	13.34B	16.39B	14.77B
Net Income	11.42B	13.05B	11.86B	10.08B	12.54B	11.51B
Balance Sheet
Total Assets	339.93B	381.63B	341.18B	406.05B	399.30B	399.11B
Cash, Cash Equivalents and Short-Term Investments	227.99B	230.91B	224.70B	276.39B	342.33B	328.61B
Total Debt	2.01B	1.29B	1.60B	1.75B	2.06B	2.78B
Total Liabilities	289.98B	327.22B	289.38B	355.95B	349.39B	349.87B
Stockholders Equity	49.48B	53.85B	51.34B	49.73B	49.63B	48.92B
Cash Flow
Free Cash Flow	1.43B	11.17B	10.11B	13.67B	11.27B	13.42B
Operating Cash Flow	1.43B	12.77B	11.50B	14.96B	12.34B	14.77B
Investing Cash Flow	0.00	3.19B	-6.29B	-1.70B	2.28B	-7.48B
Financing Cash Flow	0.00	-11.26B	-11.25B	-10.37B	-12.67B	-7.47B

Hong Kong Exchanges & Clearing Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 423.20
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HK:0388, the sentiment is Positive. The current price of 423.2 is above the 20-day moving average (MA) of 411.25, above the 50-day MA of 386.42, and above the 200-day MA of 326.96, indicating a bullish trend. The MACD of 8.77 indicates Positive momentum. The RSI at 62.60 is Neutral, neither overbought nor oversold. The STOCH value of 85.88 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HK:0388.

Hong Kong Exchanges & Clearing Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
0388	76 Outperform	$529.96B	37.40	27.96%	2.34%	19.20%	24.01%
6866	68 Neutral	HK$330.40M	7.82	1.97%	4.82%	-21.32%	-63.98%
Sector *	67 Neutral	$16.85B	11.65	9.71%	3.90%	11.61%	-9.60%
2139	61 Neutral	HK$3.99B	6.32	1.74%	―	-7.44%	-11.97%
0216	55 Neutral	HK$336.33M	―	-7.70%	4.10%	-28.23%	-854.72%
0674	39 Underperform	HK$377.13M	―	-14.41%	―	-53.91%	-499.35%
4C30		€54.04M	8.15	3.78%	―	―	―

Hong Kong Exchanges & Clearing Corporate Events

HKEX Schedules Board Meeting to Approve Interim Results and Dividend

Hong Kong Exchanges and Clearing Limited (HKEX) has announced that its Board of Directors will meet on August 20, 2025, to approve the interim results for the first half of the year and consider the payment of an interim dividend. This meeting is significant as it will provide insights into the company’s financial performance and potential returns for shareholders, impacting its market positioning and stakeholder interests.

The most recent analyst rating on (HK:0388) stock is a Buy with a HK$349.00 price target. To see the full list of analyst forecasts on Hong Kong Exchanges & Clearing stock, see the HK:0388 Stock Forecast page.

HKEX’s New Articles of Association Approved by SFC

Hong Kong Exchanges and Clearing Limited (HKEX) announced the approval and immediate effect of its new Articles of Association by the Securities and Futures Commission on May 19, 2025. This development marks a significant step in HKEX’s corporate governance, potentially impacting its operational framework and stakeholder relations.

The most recent analyst rating on (HK:0388) stock is a Buy with a HK$349.00 price target. To see the full list of analyst forecasts on Hong Kong Exchanges & Clearing stock, see the HK:0388 Stock Forecast page.

HKEX Appoints New Group Chief Financial Officer

HKEX has announced the appointment of Mr. Hui Leung Wah, Herbert as the new Group Chief Financial Officer, effective June 9, 2025. Mr. Hui, who brings over 35 years of experience in financial management and corporate finance, will oversee the financial, treasury, and investor relations functions of the group. This strategic appointment is expected to strengthen HKEX’s financial leadership and enhance its operations, potentially impacting its market positioning and stakeholder relations positively.

The most recent analyst rating on (HK:0388) stock is a Buy with a HK$349.00 price target. To see the full list of analyst forecasts on Hong Kong Exchanges & Clearing stock, see the HK:0388 Stock Forecast page.

HKEX Re-appoints Carlson Tong as Chairman

Hong Kong Exchanges and Clearing Limited (HKEX) announced the re-appointment of Mr. Carlson Tong as the Chairman of the Board of Directors, following approval from the Chief Executive of the Hong Kong Special Administrative Region. This decision is expected to provide continuity in leadership and strategic direction for HKEX, potentially impacting its operations and stakeholder relations positively.

HKEX Announces AGM Results and Directorate Changes

At the 2025 Annual General Meeting of HKEX, all proposed resolutions were passed, including the election of Peter Wilhelm Hubert Brien as a Director and the re-appointment of PricewaterhouseCoopers as Auditor. The meeting also saw the retirement of Mr. Apurv Bagri and Ms. Nisa Leung from the Board, with Ms. Ding Chen appointed by the Hong Kong Government as a new Director. These changes in the directorate are expected to influence HKEX’s strategic direction and governance. The adoption of new Articles of Association was approved, pending further approval from the Securities and Futures Commission, which may impact the company’s operational framework.

HKEX Re-appoints Carlson Tong as Chairman

HKEX has announced the re-appointment of Mr. Carlson Tong as the Chairman of the Board, pending approval from the Chief Executive of the Hong Kong Special Administrative Region. This decision, effective after the 2025 AGM, is expected to ensure continuity in leadership and potentially strengthen HKEX’s strategic positioning in the market.

HKEX Announces Board of Directors and Committee Roles

HKEX has announced the composition of its Board of Directors, highlighting the roles and responsibilities of each member across nine committees. This organizational structure aims to enhance governance and operational efficiency, potentially impacting HKEX’s strategic direction and stakeholder engagement.

HKEX Achieves Record Quarterly Results Amid Strategic Expansions

HKEX reported its best quarterly results on record for Q1 2025, driven by increased global interest in China and innovations in artificial intelligence. The company achieved record trading volumes across various markets, including cash, derivatives, and commodities, and saw a significant rise in IPO applications. Strategic initiatives, such as new partnerships and product launches, have bolstered HKEX’s market position, reinforcing its status as a top global fundraising venue and enhancing its connectivity with global markets.

HKEX Acquires New Headquarters in Major Strategic Move

HKEX has announced the acquisition of new premises for its permanent headquarters, involving a transaction of HK$6.3 billion. The purchase includes significant office space in Exchange Square, a prime location in Hong Kong’s central business district. This strategic move is expected to enhance HKEX’s operational capacity and reinforce its position as a leading financial hub. Additionally, a project management agreement has been established for enhancement works at the premises, with Hongkong Land contributing up to HK$400 million towards these improvements.

HKEX Forfeits Unclaimed 2018 Dividends

HKEX announced the forfeiture of unclaimed second interim dividends for 2018, amounting to HK$15,493,077.70, which will revert to the company. This move underscores HKEX’s adherence to its Articles of Association and may impact stakeholders who failed to claim their dividends within the stipulated timeframe.