Hong Kong Exchanges and Clearing Limited (HKEX) reported a 30% increase in net profit for the third quarter to HK$2.95 billion (US$377.1 million), driven by a surge in net investment income. The rise in investment income also contributed to a 9% increase in core revenue, which reached HK$4.70 billion.
The earnings gains were partially offset by a decrease in equity product listing fees, which fell by HK$66 million due to fewer forfeitures. CEO Nicolas Aguzin noted a slight increase in average daily turnover to HK$98.4 billion, interpreting it as a positive indicator amidst fragile macroeconomic conditions.
In the first three quarters of the year, HKEX generated HK$24.6 billion from 47 new listings. This represents a significant 67% year-on-year decrease, attributed to global downturns in the initial public offering (IPO) market.
According to InvestingPro data, the company has a P/E Ratio (Adjusted) of 43.35 and a Price / Book ratio of 11.73, indicating it is trading at a high earnings multiple and a high Price / Book multiple. Additionally, the company's Operating Income Margin stands at 72.22%, demonstrating its profitability.
InvestingPro Tips also highlights that HKEX is a prominent player in the Capital Markets industry and has been profitable over the last twelve months. These tips, along with 6 other insightful tips, can be accessed by subscribing to InvestingPro.
Nonetheless, with 115 active IPO applications as of the end of September and signs of renewed global fundraising activity, HKEX anticipates future growth. The exchange's strong IPO pipeline suggests the potential for an upswing in listing revenues that could bolster its financial performance in the coming quarters.
In light of these insights, the company's stockholders can expect high returns on book equity as per InvestingPro Tips. Furthermore, the company has maintained dividend payments for 24 consecutive years, with a recent dividend growth of 36.36% as reported by InvestingPro data. This, coupled with the company's fair value of 537.9 as per InvestingPro, suggests a promising outlook for HKEX.
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