Hong Kong Exchanges & Clearing Ltd. · HKEX:388
Hong Kong Exchanges & Clearing — Q3 2020 Earnings Presentation
26 slides from Hong Kong Exchanges & Clearing's earnings presentation, Nov 11, 2020
Slide 1: 2020 Q3 Results Media Presentation
2020 Q3 Results Media Presentation Charles Li Chief Executive, HKEX Group Vanessa Lau Group Chief Financial Officer, HKEX Group 11 November 2020
Slide 2: Disclaimer
Disclaimer The information contained in this document is for general informational purposes only and does not constitute an offer, solicitation, invitation or recommendation to subscribe for or purchase any securities, or other products or to provide any investment advice or service of any kind. Thi
Slide 3: Agenda
Agenda 01 | Q3 2020 Key Highlights 02 | HKEX Group Financial Review 03 | Business and Strategic Update 04 | Appendix
Slide 4: Q3 2020 Key Highlights
Q3 2020 Key Highlights 1| Financial Performance Record nine-month revenue despite challenging macroeconomic backdrop with core business revenue up by 21%YoY, reflecting higher trading and clearing fees driven by record headline ADT Record nine-month Stock Connect revenue of HK$1,354mn (+79%YoY)
Slide 5: HKEX Group Financial Review
HKEX Group Financial Review
Slide 6: Key Financial Highlights
Key Financial Highlights Record revenue and profit Record core business revenue; market conditions impacted investment income (HK$) Total revenue & other income Core business revenue Net investment income +12% +21% -31% $12.6bn $14.1bn $10.4bn $12.6bn $2.2bn $1.5bn YTD Q3 2019 YTD Q3 2020 YTD Q3 201
Slide 7: YTD Q3 2020: Record Revenue and Profit
YTD Q3 2020: Record Revenue and Profit Revenue and Operating Profit attributable to HKEX EBITDA Basic earnings per share other income expenses (1) shareholders (2) (HK$ mn) (HK$) Core business+NII Core business+NII Core business+NII Core business+NII + 12% + 11% + 13% + 16% + 15% Core business Core
Slide 8: Q3 2020: Quarterly Record High due to Record Stock Connect Revenue and Higher Headline ADT
Q3 2020: Quarterly Record High due to Record Stock Connect Revenue and Higher Headline ADT Profit attributable to Revenue and other income Operating expenses (1) EBITDA HKEX shareholders (2) (HK$ mn) Core business+NII + 8% Core business+NII Core business+NII + 11% + 12% + 13% Core business Core busi
Slide 9: YTD Q3 2020 Performance above Historical Trendline
YTD Q3 2020 Performance above Historical Trendline Quarterly performance (HK$ mn) Profit attributable to shareholders Revenue and other income 5,309 Operating expenses (1) EBITDA 4,773 4,288 4,290 4,150 4,102 4,177 4,057 4,044 3,987 4,009 3,746 3,747 3,571 3,523 3,454 3,722 3,155 3,318 3,307 3,195 3
Slide 10: Higher Revenue across All Business Segments, Offsetting Lower Net Investment Income
Higher Revenue across All Business Segments, Offsetting Lower Net Investment Income Segmental revenue (HK$ mn) 925 86 14,091 887 163 61 12,565 (596) +32% +7% +6% +19% +15% -60% +12% YTD Q3 YTD Q3 2019 2019 Cash Equity and Financial Commodities Post Trade Technology Corporate Items YTD Q3 2020 Deriva
Slide 11: Lower Net Investment Income in a Low Interest Rate Environment
Lower Net Investment Income in a Low Interest Rate Environment YTD Q3 2020: HK$1,483mn (YTD Q3 2019: HK$2,156mn) External portfolio - lower gains reflecting market valuations Average fund size Internal funds - lower income from reduced interest rates and (HK$ bn) higher margin rebates to partici
Slide 12: Operating Expenses and Depreciation & Amortisation
Operating Expenses and Depreciation & Amortisation – Investment in Talent, Infrastructure and Strategic Initiatives Staff costs and IT & computer Other operating Depreciation and Premises expenses Professional fees Total opex related expenses maintenance exp expenses (1) amortisation (HK$ mn) + 9% +
Slide 13: Business and Strategic Update
Business and Strategic Update
Slide 14: Business Strength and Resiliency Delivering Good Performance
1 | Business Strength and Resiliency Delivering Good Performance Good Core Business Performance Against Challenging Macro Backdrop Strong performance in Cash Market and solid performance in derivatives and FICC Cash Market ADT +39%YoY at HK$125.7bn (record nine-month high) Futures & Options
Slide 15: Jumbo IPOs Contributing to Increased Trading Activity
1 | Business Strength and Resiliency Delivering Good Performance Jumbo IPOs Contributing to Increased Trading Activity 21 Jumbo IPOs > US$1bn (HK$7.8bn) since Jan 2018 Rising contribution to volumes from Jumbo IPOs IPO size Rank Company name IPO date Cash Market ADT (HK$ bn) contributed (HK$bn) by t
Slide 16: Continuous Trading Volume Migration and ADR conversion from Secondary Listings
1 | Business Strength and Resiliency Delivering Good Performance Continuous Trading Volume Migration and ADR conversion from Secondary Listings HKEX Trading Share – 2020 YTD ADR conversion to HK shares % of Alibaba NetEase JD.com Alibaba NetEase JD.com +448% Trading 14.8% +88% SEHK 19.1% 34.1% 21.8%
Slide 17: Strategic Plan on Track – Q3 2020 Highlights (1/2)
2 | Strategic Plan on Track – Q3 2020 Highlights (1/2) Market Enhancement Initiatives Continue Enhanced capital-based position limit (CBPL) policy to provide higher capital efficiency to participants Shortened structured products listing cycle from five to three trading days Master SPSA laun
Slide 18: Strategic Plan on Track – Q3 2020 Highlights (2/2)
2 | Strategic Plan on Track – Q3 2020 Highlights (2/2) Technology Innovation Soft launch of Fusion Bank, a new virtual bank in partnership with a number of leading HK businesses Roll-out of AI and robotic systems for listing applications Issued paperless IPO consultation in July, aiming to f
Slide 19: Looking Ahead
Looking Ahead Our core businesses across the Cash, Derivatives and Commodities Markets remain resilient, with record performance in the Cash Market Stock Connect continues to record strong flows and will continue to be a key revenue driver IPO pipeline remains strong with new economy and biote
Slide 20: Welcome questions
YTD Q3 2020 Financial Performance (vs. YTD Q3 2019) Record Revenue and PAT Core Business Revenue up 21%; Total Revenue and Other Income up 12% to HK$14.1bn Record Revenue for Connect Schemes; HKEX #3 by IPO funds raised and #4 by number of IPOs EBITDA up 13% to HK$10.9bn PAT up 16% to HK$8
Slide 21: Appendix
Appendix x
Slide 22: Financial Highlights – Income Statement
Financial Highlights – Income Statement % of Revenue & % of Revenue & (HK$ mn, unless stated otherwise) YTD Q3 2020 YTD Q3 2019 YoY Change Other Income Other Income Results Revenue and other income 14,091 100% 12,565 100% 12% Operating expenses (3,208) (23%) (2,902) (23%) 11% EBITDA 10,883 77% 9,663
Slide 23: Performance by Operating Segment
Performance by Operating Segment Equity & Corporate Group Group HK$ mn Cash Financial Commodities Post Trade Technology Items YTD Q3 2020 YTD Q3 2019 Derivatives Revenue and other income 3,637 2,511 1,107 5,771 662 403 14,091 12,565 % of Group Total 26% 18% 8% 41% 4% 3% 100% 100% Operating expenses
Slide 24: External Portfolio – Annualised Return of 5.6% since Inception
External Portfolio – Annualised Return of 5.6% since Inception Point of Injection / Redemption Cumulative gains since inception (HK$ mn) 3000 600 MSCI World 2017: 2018: 2019: YTD 2020: +23.4% -8.6% +27.1% +1.2% 580 1,600 Return (Net): 1,392 HK$2bn HK$3.3bn 560 1,400 redemption(2) 1,321 injection 250
Slide 25: Stock Connect – Trading Trends
Stock Connect – Trading Trends Stock Connect generated record revenue of HK$1,354mn in YTD Q3 2020, 79% higher than YTD Q3 2019 (Full Year 2019: HK$1,009mn) Stock Connect Average Daily Trading Volume (HK$ bn) Shenzhen Southbound Shenzhen Northbound (1) Total average daily trading volume Shanghai Sou
Slide 26: Thank you.
Thank you. For further information on HKEX, please go to hkexgroup.com and hkexnews.hk
Hong Kong Exchanges and Clearing — Q3 2020 Earnings Presentation on 6ix