HashKey upgraded to Overweight, with growth resilience and structural opportunities supporting a re-rating

Overview

This report is J.P. Morgan's Global China Summit meeting takeaways on HashKey. After the meeting, the analysts turned more positive on the company, believing that both HashKey's short-term earnings visibility and medium-term growth path have improved. The report notes that although industry-wide trading volumes have weakened, HashKey's year-to-date 2026 trading volume still grew year over year; meanwhile, as market maker costs normalize, gross margin is expected to recover meaningfully in 2026. Over the medium term, an expanded regulatory scope for digital assets in Hong Kong, institutional fund inflows, RWA tokenization, stock tokenization, stablecoins, and on-chain infrastructure buildout are viewed as the company's structural growth drivers.

Core views

The core views include: first, HashKey is still at an early penetration stage in Hong Kong's digital asset market, and user acquisition is driving trading volume performance stronger than the industry; second, gross margin was compressed in 2025 by market maker costs, and is expected to recover by about 10 percentage points in 2026; third, an increase in the retail mix from about 15% to about 20% would benefit the blended take rate, as retail pricing is about 15bps versus about 5bps for institutions; fourth, RWA tokenization, stock tokenization, and stablecoins are expected to expand the company's revenue boundaries; fifth, HashKey benefits from a licensed platform, market leadership, management team, and first-mover infrastructure advantages, but still faces risks from competition, regulation, and crypto asset volatility.

Analysis framework

The report combines management discussions from the Global China Summit, company operating guidance, J.P. Morgan estimates, and peer valuation multiples to make an integrated judgment on HashKey's short-term trading volume, gross margin recovery, medium-term product roadmap, regulatory opportunities, and valuation. Valuation adopts a relative valuation approach, using 12x 2026E P/S as the basis for the Dec-26 target price of HK$5.00.

Methodology notes

• Valuation frameworkP/S relative valuation

  12x 2026E P/S

  The Dec-26 target price of HK$5.00 is based on 12x 2026E P/S, which the report says is in line with local and global peer trading multiples.

• Earnings elasticity analysisGross margin recovery and operating leverage

  Normalization of market maker costs and revenue growth outpacing cost growth

  Gross margin in 2025 was compressed by high market maker expenses, and management expects gross margin to improve by about 10 percentage points year over year in 2026; meanwhile, operating expense growth is expected to be relatively moderate, and revenue growth is likely to significantly outpace cost growth.

• Structural growth analysisDigital asset infrastructure and RWA theme

  Migration from offshore to onshore, RWA tokenization, on-chain financial services

  The report believes trading activity is shifting from offshore unregulated venues to onshore licensed platforms, and together with the development of RWA tokenization, stock tokenization, and stablecoins, this will expand HashKey's medium-term opportunity set.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• HashKey (3887.HK)

  Core covered name and primary beneficiary

  Strengths

  Holds a Hong Kong VATP license, with a trusted licensed-platform positioning, leading Hong Kong market position, relatively comprehensive service scope, management team reputation, and HashKey Chain infrastructure layout.

  Weaknesses

  Gross margin in 2025 was compressed by market maker costs; the business remains affected by crypto asset trading activity, regulatory pace, and new product rollout.

  Comparison

  J.P. Morgan bases its target price on 12x 2026E P/S, in line with local and global peers; compared with new entrants, HashKey is seen as having stronger advantages in time-to-market, platform infrastructure, and liquidity depth.

  Risks

  Intensifying competition, slower-than-expected regulatory approvals, tighter regulation, and crypto asset volatility leading to slower fund inflows and trading velocity.

• COINBASE GLOBAL INC

  Business model comparison target

  Strengths

  The report uses Coinbase as a pricing model comparison, noting that it can monetize through spread/slippage.

  Weaknesses

  The report does not provide an independent investment view or detailed fundamental assessment of COINBASE GLOBAL INC.

  Comparison

  HashKey currently does not use a slippage-based monetization model, but may reassess its pricing direction in the future as user scale expands.

  Risks

  The report does not provide a specific list of risks for COINBASE GLOBAL INC.

• Futu

  Potential competitor in Hong Kong crypto trading business

  Strengths

  The report only mentions it as a recent entrant and does not elaborate on any strengths.

  Weaknesses

  Management believes Futu is still building its platform, with thinner liquidity and limited connectivity to liquidity providers.

  Comparison

  The report believes HashKey's first-mover advantage, platform infrastructure, and liquidity depth are relatively stronger, while competitors may need 1-2 years to create clear differentiation on the asset side.

  Risks

  If new entrants accelerate improvements in platform capabilities and asset supply, competition among Hong Kong licensed digital asset trading platforms could intensify.

• HashKey Chain/RWA tokenized assets

  Medium-term growth infrastructure and thematic asset

  Strengths

  HashKey Chain is positioned as core infrastructure for RWA tokenization and OTC trading of tokenized assets, benefiting from stock tokenization, simplified on-chain settlement, and the trend of financial services moving on-chain.

  Weaknesses

  The pace of commercialization still depends on regulatory recognition, market acceptance, and real-asset supply.

  Comparison

  Compared with traditional digitally native crypto assets, RWA and digital twin assets have larger potential market space, and regional trading platforms can differentiate through local asset types.

  Risks

  If stock tokenization and RWA implementation progress more slowly than expected, the medium-term growth narrative may weaken.

Key data

• Current ratingOverweightUpgraded from Neutral.
• Target priceHK$5.00Dec-26 target price, which the report says is maintained unchanged.
• Current priceHK$3.73As of 2026-05-22.
• Implied upsideapproximately 34.0%Calculated based on the HK$5.00 target price and HK$3.73 current price.
• Share price performance-17% vs HSI +3%Relative performance since late March; the report views the pullback as one of the contexts for the rating upgrade.
• 2025 gross margin56%Versus 74% in 2024; compressed in 2025 by higher market maker costs.
• 2026 gross margin guidanceapproximately +10 percentage points year over yearManagement expects normalization of market maker costs to drive gross margin recovery.
• Fee structureretail approximately 15bps, institutional approximately 5bps, blended approximately 10bpsA customer mix stabilizing at about 20% retail and 80% institutional is supportive of the blended take rate.
• Valuation multiple12x 2026E P/SUsed to derive the Dec-26 target price of HK$5.00.
• Stock tokenization time window6-12 monthsManagement believes stock tokenization may make substantive progress within this period.

Impact & implications

If the report's view plays out, HashKey may benefit simultaneously from short-term trading volume resilience, recovering gross margin, and medium-term structural business expansion, with valuation support extending from a single trading platform to a licensed digital asset infrastructure platform. For investors, the rating upgrade reflects J.P. Morgan's view that the recent share price pullback has improved risk-reward, but the investment thesis still depends heavily on progress in Hong Kong digital asset regulation, trading activity, new product launches, institutional fund inflows, and crypto asset market sentiment.

Risks

• More VATP-licensed institutions launching crypto exchange businesses in Hong Kong, leading to intensified competition.
• Regulatory risks, including slower-than-expected license approvals in the company's operating regions, and tighter regulation in mainland China that could affect institutional clients with mainland links.
• Volatility in crypto asset valuations and market sentiment may suppress new fund inflows and platform trading velocity, thereby dragging on revenue.
• If new product launches are slower than expected, growth and valuation upside could be weakened.
• The report discloses that J.P. Morgan has client, investment banking, and potential investment banking compensation relationships with HashKey or related entities, and that one of the cover analysts holds digital or crypto assets; the conclusions should therefore be read in conjunction with the conflict-of-interest disclosures.

What to watch

• Whether HashKey's year-over-year trading volume growth in 2026 can be sustained against a backdrop of weak overall trading activity.
• Whether gross margin in 1Q and 1H 2026 improves sequentially in line with management guidance and approaches the full-year target of about 10 percentage points year-over-year improvement.
• The launch timing and user conversion effectiveness of new products such as perpetual contracts, options, credit cards, on-chain staking, and fund products.
• Whether Hong Kong regulation expands the scope of digital asset services, including more cryptocurrencies, crypto derivatives, stablecoin distribution, and tokenized asset products.
• Progress in RD Technologies' stablecoin issuance license application, and HashKey's role in stablecoin service provision and payment infrastructure.
• Whether stock tokenization and RWA tokenization generate substantive trading volume or infrastructure demand within 6-12 months.
• Whether the retail/institutional trading mix stabilizes at about 20% retail and 80% institutional, and whether the blended take rate improves.
• Progress by competitors, especially new VATP-licensed platforms and entrants such as Futu, in liquidity, asset breadth, and Omnibus connectivity.