By Sherry Qin
Hong Kong Exchanges & Clearing is scheduled to report results for the third quarter on Friday. Here’s what you need to know:
NET PROFIT FORECAST: The exchange operator is expected to post net profit of 2.94 billion Hong Kong dollars (US$375.5 million), according to the median estimate compiled in a FactSet poll of three analysts. That would represent a 30% rise from a year earlier.
REVENUE FORECAST: Revenue is estimated at HK$4.98 billion, which would be a 26% rise on the year, according to the FactSet poll. Citi analyst said in a recent note that the expected revenue growth is likely due to higher investment income, while core revenue could remain under pressure due to muted cash activities. Nomura analysts expect HKEX’s core and total revenue to be flattish from the previous quarter due to weak cash equity, despite strong derivatives trading activity.
WHAT TO WATCH:
–AVERAGE DAILY TURNOVER: Investors will be looking at HKEX’s headline ADT–a key metric for the bourse operator–which fell 16% in the first half to HK$115.5 billion amid weak initial public offering activity worldwide. The company said at the time of its first-half results that Hong Kong performed relatively well compared to other markets in terms of IPOs. Citi analysts project that third-quarter ADT declined 5% sequentially, as sluggish market sentiment continued to weigh on trading volume.
–LISTING FEES: Also in focus is HKEX’s listing fees, a gauge of the number of companies listed. Listing fees are forecast to have fallen to HK$363.5 million in 3Q, down from HK$459 million a year earlier, according to a FactSet poll.
Write to Sherry Qin at [email protected]
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