Goldman Sachs: The quarterly results of the Hong Kong Stock Exchange (00388) beat expectations, and there is structural upward space to reaffirm the “buy” rating

The Zhitong Finance App learned that Goldman Sachs released a research report saying that the Hong Kong Stock Exchange (00388) has structural upside, raised its operating expenses forecast by 3% from 2026 to 2029, and believes that the key is whether related investments can be transformed into a new revenue source. The target price remains unchanged at HK$540, rated “buy”, and continues to be on the confirmed purchase list.

The Hong Kong Stock Exchange's second-quarter earnings beat the bank's and market expectations, partly driven by non-recurring income from unlisted equity investments. Even after excluding investment income, its profit was 7% higher than the bank's forecast. It is believed to have been driven by better than expected performance in the spot business, which was partly offset by weak revenue from derivatives products. Management mentioned that the initial public offering pipeline is strong and continues to transform into listed projects. Since 2025, newly listed companies have contributed more than 10% to the average daily turnover. The bank believes that the record listing pipeline and strong IPO performance will provide a solid foundation for average daily turnover growth in the second half of the year.

Investors are concerned about operating expenditure performance. Excluding the HK$90 million Financial Conduct Authority fine paid in the first half of 2025, core operating expenses increased 9% year over year. Staff costs and IT related expenses were the main drivers, which increased 10% and 8% year over year, respectively, reflecting the Hong Kong Stock Exchange's continued investment in capacity building to support the development of a multi-capital ecosystem.