UBS: Hong Kong Exchange's fourth quarter performance exceeded expectations, target price reduced to 462 Hong Kong dollars.

UBS released a report stating that the performance of the Hong Kong Stock Exchange in the fourth quarter of last year exceeded expectations, with revenue increasing by 15% year-on-year to HK$7.3 billion, approximately 9% higher than market consensus, benefiting from stronger net investment income and custody and trustee fees. Net investment income increased by 2% year-on-year and 20% quarter-on-quarter to HK$1.2 billion, mainly due to better returns on equity securities and foreign exchange gains. Net profit increased by 15% year-on-year to HK$4.3 billion, approximately 15% higher than market consensus, benefiting from effective cost control. Looking ahead, the Hong Kong Stock Exchange is seeking to make investments for growth while maintaining cost discipline. Taking into account market activity since the first quarter and UBS's latest view on federal fund rates, the bank has slightly adjusted its earnings per share forecasts for 2026, 2027, and 2028, raising them by 3%, lowering them by 2%, and lowering them by 3% to HK$13.3, HK$12.9, and HK$13.8, respectively. UBS has lowered its target price from HK$471 to HK$462, equivalent to a forward 12-month P/E ratio of 35 times, and has assigned a "neutral" rating.