Critical Review: Hong Kong Exchanges and Clearing (HKXCY) & Its Rivals

Hong Kong Exchanges and Clearing (OTCMKTS:HKXCY) is one of 1,753 publicly-traded companies in the “Capital Markets” industry, but how does it compare to its peers? We will compare Hong Kong Exchanges and Clearing to similar businesses based on the strength of its risk, institutional ownership, profitability, dividends, earnings, analyst recommendations and valuation.

Valuation and Earnings

This table compares Hong Kong Exchanges and Clearing and its peers top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Hong Kong Exchanges and Clearing	N/A	N/A	13.32
Hong Kong Exchanges and Clearing Competitors	$2.35 billion	$394.98 million	20.13

Hong Kong Exchanges and Clearing’s peers have higher revenue and earnings than Hong Kong Exchanges and Clearing. Hong Kong Exchanges and Clearing is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares Hong Kong Exchanges and Clearing and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hong Kong Exchanges and Clearing	N/A	N/A	N/A
Hong Kong Exchanges and Clearing Competitors	2,629.26%	9.47%	3.67%

Dividends

Hong Kong Exchanges and Clearing pays an annual dividend of $1.52 per share and has a dividend yield of 2.9%. Hong Kong Exchanges and Clearing pays out 38.4% of its earnings in the form of a dividend. As a group, “Capital Markets” companies pay a dividend yield of 3.1% and pay out 28.1% of their earnings in the form of a dividend. Hong Kong Exchanges and Clearing lags its peers as a dividend stock, given its lower dividend yield and higher payout ratio.

Institutional & Insider Ownership

0.2% of Hong Kong Exchanges and Clearing shares are held by institutional investors. Comparatively, 30.6% of shares of all “Capital Markets” companies are held by institutional investors. 13.2% of shares of all “Capital Markets” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for Hong Kong Exchanges and Clearing and its peers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hong Kong Exchanges and Clearing	0	1	0	0	2.00
Hong Kong Exchanges and Clearing Competitors	5228	19572	21890	603	2.38

As a group, “Capital Markets” companies have a potential upside of 20.42%. Given Hong Kong Exchanges and Clearing’s peers stronger consensus rating and higher probable upside, analysts clearly believe Hong Kong Exchanges and Clearing has less favorable growth aspects than its peers.

Summary

Hong Kong Exchanges and Clearing peers beat Hong Kong Exchanges and Clearing on 13 of the 13 factors compared.

Hong Kong Exchanges and Clearing Company Profile

Hong Kong Exchanges and Clearing Limited, together with its subsidiaries, owns and operates stock exchanges and futures exchanges, and related clearing houses in Hong Kong, Mainland China, and the United Kingdom. It operates through Cash, Equity and Financial Derivatives, Commodities, and Data and Connectivity segments. The Cash segment covers various equity products traded on the cash market platforms of the Stock Exchange of Hong Kong Limited, the Shanghai Stock Exchange, and the Shenzhen Stock Exchange; clearing, settlement and custodian, listing, depository, and nominee services; and other related activities. The Equity and Financial Derivatives segment provides and maintains trading platforms for a range of equity and financial derivative products, such as stock and equity index futures and options, derivative warrants, callable bull/bear contracts and warrants, and over the counter (OTC) derivatives contracts. The Commodities segment operates an exchange for the trading of base, ferrous, and precious metals futures and options contracts in the United Kingdom; and operates Qianhai Mercantile Exchange Co., Ltd., a commodity trading platform in the Mainland. This segment also covers commodities contracts traded on Futures Exchange. The Data and Connectivity segment offers various services that provides access to the platform and infrastructure, as well as services of BayConnect Technology Company Limited; network, terminal user, data line and software sublicense, and hosting services; and sells market data relating to the Hong Kong cash and derivatives markets. The company serves issuers and investors. Hong Kong Exchanges and Clearing Limited was incorporated in 1999 and is based in Central, Hong Kong.