Citigroup: The purchase of the permanent headquarters property by HKEX(00388) may have limited impact on costs.

Citigroup released a research report stating that Hong Kong Exchanges and Clearing Limited (00388) spent HK$6.3 billion to purchase the trading square property from a subsidiary of Hongkong Land as its permanent headquarters. The bank believes that the impact on cost from the acquisition may be limited, as the depreciation expenses of the acquired property will increase, most of which can be offset by lower rental expenses. Hongkong Land disclosed that the rental expenses for 2024 will be HK$184 million. At the same time, the bank believes that the external investment portfolio of the Hong Kong Exchanges and Clearing Limited will provide funding for the acquisition, potentially leading to a decrease in investment income. The total income from the external investment portfolio in 2024 was HK$447 million, accounting for 3% of the pre-tax profit for the 2024 fiscal year. The bank believes that the acquisition may have a low single-digit negative impact on profits. The bank gives a "Buy" rating to the Hong Kong Exchanges and Clearing Limited, with a target price of HK$385.