CICC Forecasts HKEX Q2 Net Profit to Rise 13% YoY, Maintains 'Outperform' Rating

Stock News10:38

CICC has published a research report forecasting that HKEX (00388) will post a net profit of HKD 5.04 billion for the second quarter, representing a 13% year-on-year increase but a 3% sequential decline. HKEX is scheduled to release its quarterly results on August 19.

The investment bank projects Q2 revenue will rise 12% year-on-year and fall 1% quarter-on-quarter to HKD 8.11 billion. Excluding investment income, core fee-based revenue is expected to grow 26% year-on-year and 2% quarter-on-quarter to HKD 6.95 billion. On a cumulative basis, CICC estimates the company's total revenue and net profit for the first half of the year will increase 16% and 20% year-on-year, reaching HKD 16.31 billion and HKD 10.23 billion, respectively.

Given the strong growth in northbound stock connect turnover, CICC has raised its 2026 and 2027 earnings forecasts by 2% and 3%, to HKD 19.6 billion and HKD 20.9 billion, respectively. The bank maintains an 'Outperform' rating with a target price of HKD 520.

The report notes that spot market trading activity continues to rise, with the Hong Kong stock market and northbound average daily turnover (ADT) reaching new highs. Core fee-based revenue for Q2 is expected to increase 26% year-on-year and 2% quarter-on-quarter. The overall ADT is estimated at HKD 289.5 billion, up 22% year-on-year and 5% quarter-on-quarter. Within this, southbound ADT is forecast to rise 10% year-on-year and 1% quarter-on-quarter to HKD 123.7 billion, accounting for 21.4% of Hong Kong stock turnover. Northbound ADT is expected to surge 141% year-on-year and 13% quarter-on-quarter to RMB 366.1 billion, representing 7.5% of A-share turnover. The structural market trends in A-shares have driven a significant year-on-year increase in northbound trading activity.

In terms of listings, the second quarter saw 44 IPOs completed, raising HKD 99.8 billion, an increase of 10% year-on-year but a decline of 10% quarter-on-quarter. The pace of Hong Kong listings remains elevated. Meanwhile, a rise in short-term interest rates coupled with a decline in long-term rates, alongside a drop in market volatility, is expected to put some pressure on investment income.

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