Hong Kong Exchanges & Clearing Ltd. · HKEX:388
Hong Kong Exchanges & Clearing — HKEx Group — H1 2015 Earnings Presentation
36 slides from Hong Kong Exchanges & Clearing's earnings presentation, Aug 12, 2015
Slide 1: HKEx Group 2015 Interim Results Presentation
Pursuant to Chapter 38 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited,Strictly Confidential the Securities and Futures Commission regulates Hong Kong Exchanges and Clearing Limited in relation to the listing of its shares on The Stock Exchange of Hong Kon
Slide 2: HKEx Group 2015 Interim Results Presentation
HKEx Group 2015 Interim Results Presentation 12 August 2015 Charles Li Chief Executive, HKEx Group Paul Kennedy Chief Financial Officer, HKEx Group
Slide 3: Disclaimer
Disclaimer This presentation does not constitute an offer, solicitation or invitation to subscribe for and/or purchase any securities in any jurisdiction in which such offer, solicitation or invitation is unlawful or is not authorised or to any person to whom it is unlawful to make such offer, solic
Slide 4: Agenda
Agenda 1 HKEx Group Business Review 2 HKEx Group Financial Review 3 Strategic Plan Update 4 Appendix 4
Slide 5: Agenda
Agenda 1 HKEx Group Business Review 2 HKEx Group Financial Review 3 Strategic Plan Update 4 Appendix 5
Slide 6: 2015 1H – Key Achievements
2015 1H – Key Achievements Highest ever half-yearly revenue and net profit, up respectively 48% and 73% y-o-y Highest ever half-yearly ADT and ADV in cash and derivatives markets driven by market sentiment and supported by Stock Connect enhancements Globally #2 in IPO funds raised, increase 58% y-o-
Slide 7: Strong 2015 Momentum Accelerated Since Q2
Strong 2015 Momentum Accelerated Since Q2 Securities ADT (HK$ billion) Derivatives ADV (’000 contracts) Futures Options 817 125 88 572 577 533 468 488 72 69 70 69 432 62 63 398 54 359 34 174 18 13 8 10 16 62 80 104 7 39 44 45 2015 YTD 2015 YTD 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2
Slide 8: Unprecedented Volumes Since April 2015
Unprecedented Volumes Since April 2015 With some tapering off in recent weeks Cash Market Daily Turnover (HK$ billion) and Hang Seng Index HK$ billion Cash Market Daily Turnover (LHS) Index Hang Seng Index (RHS) 300 30,000 250 200 25,000 150 100 20,000 50 0 01/11/2014 01/12/2014 01/01/2015 01/02/201
Slide 9: Agenda
Agenda 1 HKEx Group Business Review 2 HKEx Group Financial Review 3 Strategic Plan Update 4 Appendix 9
Slide 10: Highlights – 1H 2015 Results
Highlights – 1H 2015 Results Record revenues, EBITDA and PAT Revenue and other Operating Profit attributable to Basic earnings per EBITDA income expenses (1) HKEx shareholders share ($ million) ($) Margin +48% 69% 77% 6,853 +65% 5,273 4,621 +73% 4,095 +71% 3.49 3,198 +11% 2,367 2.04 1,423 1,580 1H 2
Slide 11: Performance by Operating Segment
Performance by Operating Segment EBITDA Equity & Financial Platform & Group Total Cash Equity Commodities Clearing Derivatives Infrastructure (incl. Corp. Items) ($ million) 69% 77% % EBITDA margin +65% % Share of Group EBITDA (before Corporate Items) 5,273 83% 85% 75% 79% 49% 71% 84% 88% 63% 70% 3,
Slide 12: Quarterly Trend
Quarterly Trend Key Performance Indicators by Quarter ($ million) (1) Profit attributable to Shareholders Revenue and Other Income Operating Expenses EBITDA 4,057 3,195 2,796 2,757 2,471 2,335 2,286 2,222 2,218 2,134 2,149 2,078 2,520 1,895 1,975 1,875 1,693 1,748 1,718 1,553 1,546 1,601 1,597 1,391
Slide 13: Commentary on Income Growth Rates
Commentary on Income Growth Rates Relationship of headline ADT to income is not linear Cash Equity Equity & Financial Derivatives Commodities Clearing +88% +151% -3% +99% ADT ADT $62.9bn $125.3bn ADT $51.6bn $96.9bn $11.3bn $28.4bn ADV 719k 696k +39% +49% Futures & SI $196.5bn $292.9bn options 263k
Slide 14: Highlights – Balance Sheet
Highlights – Balance Sheet As at 30 June 2015 ($ million, except %) 300,663 300,663 Leverage Ratios Corporate Funds 13,844 Total Debt 3,329 Net Debt (1) - Margin Funds and Liabilities of Margin Clearing House Funds and Clearing Total Debt / Equity (2) 12% Funds House Funds 168,831 167,933 Total Debt
Slide 15: Agenda
Agenda 1 HKEx Group Business Review 2 HKEx Group Financial Review 3 Strategic Plan Update 4 Appendix 15
Slide 16: Recent Chinese Market Volatility
Recent Chinese Market Volatility SSE Composite Index, Hang Seng Index and HK Cash Market Daily Turnover Index SSE Composite Index (LHS) (Rebased) Hang Seng Index (LHS) HK$ billion HK Cash Market Daily Turnover (RHS) 250 300 Prompted significant policy actions by 200 Mainland authorities 200 150 Co
Slide 17: Have Events in the Mainland Market Affected Our Outlook?
Have Events in the Mainland Market Affected Our Outlook? Key Questions HKEx View Has China’s attitude towards Near term: possible delay in major projects Policy market liberalisation and opening Medium term: reinforced need for institutional changed? investors and domestic risk management refo
Slide 18: Moving Towards a Mutual Market Era
Moving Towards a Mutual Market Era Pace of rollout may change, but strong conviction in model’s applicability Regulatory Collaboration SSE SZSE CFFEX DCE SHFE ZCE Mutual Market Mainland / HK Equity Commodities Trading Equities Derivatives Clearing Link Link International Fixed Income Currency Equiti
Slide 19: Q & A
Q&A HKEx Group Website: www.hkexgroup.com HKExnews Website: www.hkexnews.hk 19
Slide 20: Agenda
Agenda 1 HKEx Group Business Review 2 HKEx Group Financial Review 3 Strategic Plan Update 4 Appendix 20
Slide 21: Financial Highlights – Income Statement
Financial Highlights – Income Statement % of revenue & other % of revenue & other ($ million, unless stated otherwise) 1H 2015 income 1H 2014 income Y-o-Y change Results Revenue and other income 6,853 100% 4,621 100% 48% Operating expenses (1,580) (23%) (1,423) (31%) 11% EBITDA 5,273 77% 3,198 69% 6
Slide 22: Performance by Operating Segment – 1H 2015
Performance by Operating Segment – 1H 2015 Equity & Platform and Corporate Group Group $ million Cash Equity Financial Commodities Clearing Infrastructure Items 1H 2015 1H 2014 Derivatives Revenue and other income 1,886 1,100 886 2,657 248 76 6,853 4,621 % of Group Total 27% 16% 13% 39% 4% 1% 100% 1
Slide 23: Revenue by Operating Segment: Cash Equity Trading Fees
Revenue by Operating Segment Trading fees and trading tariff – Cash Equity segment Equity products traded on SEHK Total trading fees (per slide 12) Trading fees Trading tariff +88% +51% 51.6 96.9 875 1,318 ADT $bn Avg daily no. of trades ’000 ($ million) +80% 1,321 +85% 1,160 733 627 +52% 161 106 1H
Slide 24: Revenue by Operating Segment: Equity & Financial Derivatives
Revenue by Operating Segment Trading fees and trading tariff – Equity & Financial Derivatives segment (including reallocation to Clearing segment) DWs, CBBCs and warrants traded on SEHK Derivatives contracts Stock options traded on Total trading fees traded on HKFE SEHK (per slide 12) Trading fees T
Slide 25: Revenue by Operating Segment: Clearing Segment
Revenue by Operating Segment Clearing and settlement fees – Clearing segment Securities traded on Futures and options Commodities contracts Total clearing fees SEHK (excluding stock contracts (per slide 12) options) +99% +54% -3% 62.9 125.3 526 808 719 696 ADT $bn ADV ’000 ADV ’000 +49% 196.5 292.9
Slide 26: Net Investment Income
Net Investment Income HK Portfolios LME Overall, the Group’s investment income Corp Funds Corp Funds Margin Clearing Corp Funds Margin Clearing for 1H 2015 improved by $42m versus (Internal) (External) Funds House Funds (Internal)(1) Funds House Funds the same period in 2014 ($ million) 284 250
Slide 27: Operating Expenses and Depreciation & Amortisation
Operating Expenses and Depreciation & Amortisation Staff costs IT and computer Legal and Other Depreciation and and related maintenance Premises expenses professional operating amortisation expenses expenses fees expenses(1) ($ million) +26% 1,034 822 -4% -4% -72% +38% 324 325 261 251 127 145 139 10
Slide 28: Drivers of Key Income Categories
Drivers of Key Income Categories Cash segment: Increase in ADT for ETFs will usually lead to more trading fee exemptions for market makers Listing fees do not vary directly with ADT: Initial listing fees from IPOs driven by overall equity funds raised as well as the number of IPOs Annual lis
Slide 29: Record Setting Quarter
Record Setting Quarter Item Record High Date 1. Cash Market Trading Turnover HK$ 294 bn 9 April 2015 2. Total Futures and Options Trading Turnover 1,725,327 contracts 13 April 2015 3. Stock Options Trading Turnover 1,221,324 contracts 13 April 2015 4. After Hour Futures Trading Total Trading Turnove
Slide 30: Stock Connect – Trading Trends
Stock Connect –Trading Trends Northbound (NB) Southbound (SB) Daily Trading Volume(1) as % of as % of 0.6% SSE total 1.5% SEHK total RMB 7.2bn HKD 3.7bn 123.8bn 113.4bn aggregate (41%) aggregate (36%) quota used quota used (RMB) (HKD) (RMB bn) (HKD bn) Cumulative Statistics(1) 654.4 565.5 368.2 257.
Slide 31: Business Updates: Cash Equity
Business Updates Cash Equity Waiver of stamp duty for all ETFs since 13 February 2015 ETFs reached 131, with 10 newly listed ETFs as at 31 July 2015 YTD ADT at HK$11.3 billion, up 317% y-o-y Introduced Stock Connect market data programmes in March 2015 Products Daily charge service program
Slide 32: Business Updates: Equity Derivatives
Business Updates Equity Derivatives Stock option classes reached 82, with 3 new stock option classes introduced on 22 June 2015 Record high: Total futures and options traded over 1.7 million contracts on 13 April 2015 ADT of total futures and options up 56% y-o-y Products HHI futures up 63%
Slide 33: Business Updates: Fixed Income and Currency
Business Updates Fixed Income and Currency ADT of RMB Currency Futures: around 755 contracts AHFT session accounted for 12% of day session Introduced Active Trader Programme and Spread Enhancement Programme in Products January 2015 The number of EPs ready to trade and clear RMB currency futu
Slide 34: Business Updates: RMB Products on HKEx
Business Updates RMB Products on HKEx Securities Products RMB Bonds Monthly Turnover, RMB bn Number of products Oct 2010 154 8 180 7 160 RMB REIT Apr 2011 1 6 140 5 120 RMB ETF Feb 2012 25 4 100 80 3 RMB Equity 60 Oct 2012 2 2 40 1 20 Deriv. Warrant Dec 2012 2 0 Jan-11 May-11 Sep-11 Jan-12 May-12 Se
Slide 35: Business Updates: Commodities
Business Updates Commodities 3 London Metal Mini Futures (traded and settled in RMB) continue to grow YTD ADV: around 230 contracts, with AHFT session accounted for 51% of day session Entered into partnership agreement with Borsa Istanbul on 18 March Products Target to launch Aluminium premi
Slide 36: Enhanced Platform & Infrastructure Update
Enhanced Platform & Infrastructure Update Central Clearing & Completed first phase of capacity and technology upgrade to provide extra computing power Settlement System Target to complete the remaining phases by end of 2015 (CCASS) Orion Central The vast majority of EPs migrated to the OCG thr