Broker: UOB Kay Hian
Date of Report: Thursday, 18 September 2025
Hong Kong Exchanges and Clearing (HKEX): Surging ADT, Robust IPO Pipeline, and Policy Tailwinds Drive Bullish Outlook
Overview: HKEX Positioned for Stellar Growth Amidst Market Optimism
Hong Kong Exchanges and Clearing (HKEX) is riding a wave of optimism, with projections pointing to exceptional financial performance in the third quarter of 2025 and beyond. The exchange is benefitting from record-high average daily turnover (ADT), a thriving IPO environment, and supportive policy enhancements. UOB Kay Hian maintains a bullish stance on HKEX, raising earnings forecasts and setting a higher target price in anticipation of continued growth.
Q3 2025 Financial Forecast: Earnings Surge on Record ADT
HKEX’s Q3 2025 is expected to mark another record-breaking period, underpinned by robust trading activity and favorable market conditions. The following table summarizes key financial metrics:
| Metric |
3Q25F |
2Q25 |
3Q24 |
YoY % |
QoQ % |
| Total Revenue (HK\$m) |
7,441 |
7,219 |
5,372 |
+38.5% |
+3.1% |
| Core Revenue (HK\$m) |
6,352 |
5,538 |
4,140 |
+53.4% |
+14.7% |
| NII and Other Income (HK\$m) |
1,088 |
1,682 |
1,232 |
-11.7% |
-35.3% |
| EBITDA (HK\$m) |
5,874 |
5,685 |
3,926 |
+49.6% |
+3.3% |
| Net Profit (HK\$m) |
4,613 |
4,442 |
3,145 |
+46.7% |
+3.8% |
Highlights:
- Headline ADT is expected to reach HK\$279.8 billion, up 135.4% year-on-year and 17.7% quarter-on-quarter.
- Southbound ADT is forecast to soar 2.8x year-on-year to HK\$148 billion, accounting for 26.5% of total headline ADT.
- Stock Futures & Options ADV rises 22.8% year-on-year, reflecting elevated derivatives trading activity.
- Net profit for Q3 2025 is projected to surge by 47% year-on-year, building on 39% year-on-year growth in the first half of 2025.
Key Financials: 2023–2027 Forecast and Historical Performance
| Year (HK\$m) |
2023 |
2024F |
2025F |
2026F |
2027F |
| Net Turnover |
20,516 |
22,374 |
28,574 |
29,340 |
29,525 |
| EBITDA |
14,828 |
16,281 |
22,047 |
22,506 |
22,418 |
| Operating Profit |
13,385 |
14,879 |
20,544 |
20,898 |
20,697 |
| Net Profit |
11,862 |
13,050 |
17,192 |
17,520 |
17,356 |
| EPS |
935.6 |
1,032.1 |
1,359.6 |
1,385.6 |
1,372.5 |
| P/E |
49.0 |
44.4 |
33.7 |
33.1 |
33.4 |
| Dividend Yield (%) |
1.8 |
2.0 |
2.7 |
2.7 |
2.7 |
| ROE (%) |
23.5 |
24.8 |
31.4 |
31.5 |
30.7 |
- Net margin remains robust, rising to 60.9% in 2025 before marginally softening to 59.4% in 2027.
- ROE is projected to peak at 31.5% in 2026, reflecting strong profitability and capital efficiency.
- Dividend yield is forecast to rise to 2.7% from 2025 onwards.
IPO Boom: Record Pipeline and Mega Listings on the Horizon
- In the first eight months of 2025, HKEX welcomed 59 new listings, raising HK\$134.5 billion — a staggering 5.8x increase year-on-year.
- The IPO pipeline is at an all-time high, with 240 active applications, surpassing the previous 2021 peak.
- The pipeline is diversified, including A+H shares, first-time Chinese listings, and overseas companies seeking secondary listings.
- Potential blockbuster IPOs include Chery Automobile, Zijin Gold, Mindray, and Shein, which could further energize the market.
Policy and Regulatory Tailwinds: Enhancing Attractiveness and Market Infrastructure
- The Hong Kong government’s latest policy address proposes enhancements to listing rules, especially for companies with weighted voting right structures — a move likely to attract more Chinese ADRs for dual listings.
- Continued collaborations with mainland authorities aim to introduce offshore treasury bond futures, expand interest rate derivatives under Swap Connect, and include renminbi trading counters in Stock Connect.
- Planned infrastructure improvements include narrowing minimum spreads, revising settlement fees, improving margin collateral arrangements, accelerating settlement to T+1, extending trading hours, and introducing zero-days to expiry options.
Optimistic Outlook: Upward Revisions and Multiple Tailwinds
- Street consensus for 2025’s headline ADT is HK\$230 billion, but current trends suggest potential upgrades, with year-to-date ADT at HK\$252 billion.
- Key drivers include anticipated US rate cuts, strong Southbound flows, and the buoyant IPO pipeline.
- UOB Kay Hian raises HKEX’s ADT and earnings assumptions for 2025–2027, reflecting incremental market cap from IPO activity and robust trading.
Assumption Changes: Stronger ADT and Earnings Revisions
| Metric |
2025F Old |
2025F New |
Change (%) |
2026F Old |
2026F New |
Change (%) |
2027F Old |
2027F New |
Change (%) |
| Cash ADT (HK\$b) |
231.5 |
254.3 |
+9.8% |
219.1 |
268.6 |
+22.6% |
239.5 |
278.1 |
+16.1% |
| Futures ADV (‘000) |
803 |
801 |
-0.3% |
849 |
847 |
-0.2% |
904 |
902 |
-0.3% |
| Stock F&O ADV (‘000) |
860 |
871 |
+1.3% |
849 |
847 |
-0.2% |
989 |
1002 |
+1.3% |
| LME ADV (‘000) |
686 |
684 |
-0.2% |
719 |
718 |
-0.2% |
761 |
759 |
-0.2% |
Valuation and Recommendation: Higher Target, Continued Upside
- UOB Kay Hian maintains a BUY rating with a new target price of HK\$540.00 (up 4%), reflecting positive earnings revisions and a lower cost of equity (8.7%).
- The target price implies a 39x 2026F PE, 0.5 standard deviations above the historical mean; current trading is slightly below the historical mean at 33x forward PE.
Company Snapshot: Market Position and Shareholding
- HKEX owns and operates the Hong Kong stock and futures exchanges and their clearing houses, enjoying monopoly status in these markets.
- Market capitalization stands at HK\$580.7 billion (US\$74.7 billion).
- The Government of Hong Kong SAR remains a major shareholder with a 5.8% stake.
- 52-week share price range: HK\$220.20 to HK\$466.00.
- FY25 NAV/Share: HK\$44.0.
Comprehensive Financials: Profitability, Balance Sheet, and Cash Flow
| Year |
2024F |
2025F |
2026F |
2027F |
| Net Turnover (HK\$m) |
22,374 |
28,574 |
29,340 |
29,525 |
| EBITDA (HK\$m) |
16,281 |
22,047 |
22,506 |
22,418 |
| Operating Profit (HK\$m) |
14,879 |
20,544 |
20,898 |
20,697 |
| Net Profit (HK\$m) |
13,050 |
17,192 |
17,520 |
17,356 |
| EPS (HK\$c) |
1,032.1 |
1,359.6 |
1,385.6 |
1,372.5 |
| EBITDA Margin (%) |
78.1 |
77.6 |
76.7 |
– |
| Net Margin (%) |
60.9 |
60.4 |
59.4 |
– |
| ROE (%) |
31.4 |
31.5 |
30.7 |
– |
Conclusion: HKEX Set for Further Upside
HKEX is on track for another standout year, driven by record trading activity, a revitalized IPO market, and proactive policy support from the Hong Kong government. The exchange is aggressively enhancing its market infrastructure and maintaining a strong pipeline of listings, ensuring its dominance and attractiveness for both issuers and investors. With significant earnings and ADT upgrades, and a raised target price, HKEX remains a compelling BUY for investors looking for exposure to Asia’s premier financial marketplace.
