20150417-美银美林-Higher_ADT_means_higher_EPS.Buy_HKEx___HK_Brokers_22页_1mb

报告摘要

Summary of the Document

Core Content

This document presents a research analysis by Bank of America Merrill Lynch on the Hong Kong Exchange (HKEx) and two Hong Kong-based brokers, GTJAI and HTI. The report upgrades HKEx to a Buy rating and reiterates Neutral for HTI while maintaining Buy for GTJAI. The main drivers for the bullish outlook are increased Average Daily Turnover (ADT) in the Hong Kong market and the growth in margin finance. The report also includes scenario analyses for different ADT assumptions and provides price objectives (POs) and earnings per share (EPS) estimates for the three companies.

Main Points

HKEx is upgraded to a Buy due to higher ADT expectations.
The base case for FY2015 ADT is estimated at HK$150bn, which is 50% above the 2015 YTD run rate and 117% above 2014 ADT.
HKEx benefits significantly from ADT, with over 60% of its revenue tied to ADT, including cash equities, clearing, and derivatives.
The revised EPS for HKEx is HK$9.7, a 59% increase from previous estimates.
GTJAI is preferred over HTI among HK brokers due to its higher revenue from brokerage and margin finance and larger proportion of mainland Chinese clients.
HTI is rated Neutral due to more cautious estimates, especially on the margin finance front, and is affected by an upcoming rights issue.

Key Information

Price Objectives (POs)

Company	Rating	New PO (HKD)	Upside	Chg. In PO	Old PO	Market Price
HKEx	Buy	335.0	+17%	+81%	185	286.4
GTJAI	Buy	12.5	+20%	+69%	7.4	10.46
HTI	Neutral	12.0	+15%	+114%	5.6	10.48

EPS Changes

Company	2015 EPS (HKD)	Previous 2015 EPS (HKD)	% Change
HKEx	9.70	6.09	+59%
GTJAI	0.66	0.47	+42%
HTI	0.58	0.49	+19%

Scenario Analysis for HKEx

Metric	Downside	Base	Upside
ADT (HKD bn)	89.9	150.0	190.0
EPS (HKD)	6.9	9.7	11.5
Net Profit (HKD)	8,007	11,323	13,361
RoE (%)	36.7	51.5	60.5
Cost Income Ratio (%)	24.7	18.5	15.7
Fair Value Price (HKD)	235.0	335.0	391.0

Risks

Investor sentiment and government policy are critical for sustaining higher ADT and share prices.
Increased competition could lead to lower brokerage commissions and margin finance yields.
The Hong Kong Securities and Futures Commission (SFC) may impose additional constraints on margin finance growth.

Additional Insights

Mainland Chinese investors are opening more HK brokerage accounts, enabling them to trade global equity markets and keep their wealth offshore.
GTJAI has 90% of its customers from mainland China, showing a higher propensity to trade and use margin finance.
HTI is affected by a rights issue, which influences its valuation and share price.
HKEx is considered to have a monopoly-like position in the HK market due to its dominant role in the exchange.

Valuation Methodology

HKEx is valued using a 3-stage Dividend Discount Model (DDM), factoring in higher ADT and its significant contribution to revenue.
The report includes scenario analyses based on different ADT assumptions: HK$90bn (downside), HK$150bn (base), and HK$190bn (upside).

Conclusion

The report is bullish on HKEx and GTJAI, citing strong ADT growth, favorable policy, and increased mainland Chinese participation. It suggests that higher ADT is likely to be the new normal, supported by positive investor sentiment and ongoing favorable policies. However, HTI is rated Neutral due to cautious estimates and potential dilution from the rights issue. Investors are advised to consider the ADT trends, sentiment, and regulatory environment when evaluating these stocks.