Hong Kong Exchanges and Clearing (388) Q4 2024 earnings summary

Executive summary

• Achieved record annual revenue of HK$22.4 billion (up 9% YoY) and profit attributable to shareholders of HK$13.1 billion (up 10% YoY), with Q4 profit up 46% YoY, driven by robust trading volumes, new product launches, and strategic initiatives.

• 71 new listings raised HK$88 billion, ranking Hong Kong 4th globally for IPO fundraising, with new economy companies accounting for over 80% of capital raised.

• Major enhancements included severe weather trading arrangements, expansion of Connect programs, and new ESG and governance standards.

• Strategic progress included reforms, new products, microstructure enhancements, and business diversification, with double-digit growth in cash, commodities, and ETP markets.

• Declared total dividends of HK$9.26 per share, up 10% year-on-year, maintaining a 90% payout ratio.

Financial highlights

• 2024 revenue and other income: HK$22.4 billion, up 9% year-on-year; Q4 revenue and other income: HK$6.4 billion, up 31% YoY and 19% sequentially.

• EBITDA: HK$16.3 billion, up 10% with a margin of 74%.

• Profit attributable to shareholders: HK$13.1 billion, up 10% year-on-year; basic EPS: HK$10.32, up 10% YoY.

• Q4 2024 headline average daily turnover (ADT) reached HK$186.9 billion, more than double Q4 2023; FY2024 headline ADT: HK$131.8 billion, up 26% YoY.

• Operating expenses up 6% YoY, mainly due to higher staff and IT costs, partly offset by lower professional fees.

Outlook and guidance

• Cautiously optimistic for 2025 amid macro uncertainties, with renewed interest in trading and IPOs but ongoing geopolitical and economic headwinds.

• Plans to implement minimum spreads reduction, publish a white paper on settlement cycles, and conclude IPO price discovery consultation in 2025.

• Internally managed investment income may be impacted by potential interest rate cuts; derisking of External Portfolio expected to reduce earnings volatility.

• Higher amortisation from new LME platform and new tax rules expected to weigh on 2025 earnings.

• Focus remains on infrastructure investment, market competitiveness, and sustainability.