Citigroup: HKEx's revenue and costs in the last quarter exceeded expectations, rating "buy"

According to Citibank's report, the Hong Kong Exchange announced a net profit attributable to shareholders of 4.3 billion Hong Kong dollars in the fourth quarter of 2025, down 12% from the previous quarter and up 15% year-on-year, exceeding market expectations by 16%. Core revenue was 5.5 billion Hong Kong dollars, down 12% from the previous quarter but up 17% year-on-year, exceeding market expectations by 2%, mainly driven by increased listing fees and custody fees. Investment income was 1.2 billion Hong Kong dollars, exceeding market expectations by 45%, partly due to non-listed equity gains of 163 million Hong Kong dollars and forex gains of 53 million Hong Kong dollars recorded in the quarter. Operating expenses increased by 4% year-on-year, mainly due to higher depreciation expenses but lower than market expectations by 9%. A second interim dividend of HK$6.52 per share was announced, with a payout ratio of approximately 89%. The bank has a "buy" rating on the stock with a target price of HK$505.