Financial Data and Key Metrics Changes - In Q1 2022, revenues were HKD 4.7 billion, down 1% from Q4 2021 and 21% lower year-on-year [6][12] - Profit remained broadly flat at HKD 2.7 billion compared to Q4 2021 but was down 31% year-on-year [6][12] - Core business revenue, excluding net investment income, was HKD 4.8 billion, up 7% against Q4 but down 16% versus the record Q1 last year [11][12] - EBITDA was HKD 3.5 billion, down 28% year-on-year [14] Business Line Data and Key Metrics Changes - Cash and derivatives business showed resilience despite weak market sentiment, with stock Connect ADT rising 27% from the previous quarter [6][7] - Bond Connect ADT reached a record quarterly high [7] - Trading volumes on the Hong Kong Futures Exchange and the LME saw solid growth, particularly in newer products like Hang Seng TECH Index Futures [13] Market Data and Key Metrics Changes - Hong Kong's IPO market was impacted by the macro environment, but the pipeline remained strong with over 150 active applications, including 10 SPAC applications [8][25] - Average daily trading (ADT) in cash markets rose 16% from the preceding quarter [23] Company Strategy and Development Direction - The company aims to build the marketplace of the future, focusing on three strategic imperatives: connecting China and the world, connecting capital with opportunities, and connecting today with tomorrow [29][30][32] - New initiatives include launching thematic ETFs and modernizing operations and infrastructure [26][28] - The company is committed to sustainability, with an increase in green and ESG-related bond listings [28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing market volatility and geopolitical fragility but expressed confidence in the company's strong fundamentals and clear strategy [22][35] - The gradual relaxation of pandemic-related restrictions globally is seen as a cautious optimism for future performance [35] Other Important Information - The company is focused on enhancing its product ecosystem and exploring new opportunities in collaboration with Mainland partners [41][75] - The company plans to continue investing in technology, talent, and risk management to support its strategic initiatives [20][36] Q&A Session Summary Question: Insights from the trip to Mainland China and product ecosystem priorities - Management emphasized the importance of Hong Kong as a connector to global markets and discussed ongoing initiatives like ETF Connect [42][43] Question: Sustainability of margin funds AUM increase - Management indicated that the increase in margin funds AUM is linked to trading volumes and volatility, with rising interest rates expected to benefit investment income [40][46] Question: Economics behind SPAC listings - Management explained that SPACs provide an alternative market access method, with listing fees and trading activity expected to increase post-de-SPAC transaction [52][55] Question: IPO pipeline outlook - Management noted the IPO pipeline has grown to around 180 applications, with varying timelines for companies to access the market [60][62] Question: Earnings volatility reduction plans - Management acknowledged the need for stability in revenue streams and highlighted the success of new derivative products in generating activity [80]
HKEX(HKXCY) - 2022 Q1 - Earnings Call Transcript