Futu Holdings Limited (FUTU) on Q1 2021 Results - Earnings Call Transcript
Operator: Hello, ladies and gentlemen. Welcome to Futu Holdings First Quarter 2021 Conference Call. After management’s prepared remarks, there will be a question-and-answer session. I would now like to turn the conference over to your host for today’s conference call, Mr. Daniel Yuan, Chief of Staff and Head of IR at Futu. Please go ahead, sir. Daniel Yuan: Thanks, operator. And thank you for joining us today to discuss our First Quarter 2021 earnings results. Joining me on the call today are: Mr. Leaf Li, Chairman and Chief Executive Officer; Arthur Chen, Chief Financial Officer; and Robin Xu, Senior Vice President. As a reminder, today’s call may include forward-looking statements, which represent the company’s belief regarding future events, which by their nature are not certain and are outside of the company’s control. Forward-looking statements involve inherent risks and uncertainties. We caution you that number of important factors could cause the actual results to differ materially from those contained in any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the company’s filings with the SEC, including its registration statement. So with that, I would now turn the call over to Leaf. Leaf will make his comments in Chinese and I will translate. Leaf Li: Daniel Yuan: Hello everyone, thank you for joining the earnings call today. We are excited to announce that we started off the year with robust growth across our operating and financial matrices. Leaf Li: Daniel Yuan: Our net paying client addition was approximately 273,000, bringing the total number of paying clients to over 790,000, representing 231% year-over-year growth. Three months into the year, we already achieved 39% as our full-year growth target. For the first quarter, over 70% of net additions came from Hong Kong, Singapore and other overseas markets. Organic growth continued to contribute over 50% of our net new paying clients. Despite rapid client base expansion, our quarterly paying client churn rate remains a low 2%. Leaf Li: Daniel Yuan: In several official debut in Singapore on March 8, we have experienced significant growth in client acquisition. Our superior product experience and laser focus on client servicing, coupled with our online and offline advertising and strong word of mouth referral, has helped us quickly capture the mindshare of Singaporeans, characterized by its large and affluent Chinese population, deep and matured capital markets, high penetration of financial services and rising rate as digitalization. Singapore presents a huge market opportunity, let alone a strategic importance as an entry point into the broader Asian market. With a strong growth momentum trending into the second quarter, we are confident to entail rapid growth in Singapore. Leaf Li: Daniel Yuan: In terms of client assets, our average asset balance per paying client climbed to HKD 585,000, a record high since 2016. As of quarter-end, total client assets reached HKD 462.2 billion, representing 368% growth on a year-over-year basis and 62% growth on a quarter-over-quarter basis. Leaf Li: Daniel Yuan: Total trading volume in the quarter was HKD 2.2 trillion, up 278% year-over-year. U.S. stock trading contributed about 63% of the total trading volume. In the past quarter, we launched OSE futures from the Japan Exchange Group and Singapore stock trading, as part of our continued efforts to diversify trading offerings. Leaf Li: Daniel Yuan: Our wealth management business Money Plus established new partnerships with four reputable asset managers in the quarter, including Wells Fargo, Income Partners, Aberdeen Standard and BNY Mellon. As of quarter end, over 59,000 clients held total assets of HKD 13.1 billion in wealth management, up 189% and 108% year-over-year, respectively. As Money Plus' distribution capabilities getting increasingly recognized by asset managers, Fargo entered into an exclusive agreement with us to distribute the Hong Kong dollar denominated retail share class with its China small mid cap growth line, one of its flagship products in the region. In the first quarter, we started to offer a flagship TMT hedge fund, managed by globally renowned asset manager to our qualified investors. Leaf Li: Daniel Yuan: As of quarter end, our enterprise business Futu I&E had 152 IPO and IR clients as well as 200 ESOP solution clients. In the first quarter, we participated in all Chinese ADR’s secondary listings in Hong Kong and were the only online broker in the selling groups of the Hong Kong IPOs of Kuaishou, Baidu, and Bilibili. Leaf Li: Daniel Yuan: The enterprise accounts function in our social community gets increasingly adopted by listed companies to engage with over 14 million retail investors interested in Hong Kong and U.S. stock trading. By the end of the first quarter, over 500 listed companies have set up enterprise accounts with us to promote their products and services, provide business update and live stream earnings call. As of today, nine enterprise accounts have amount over 1 billion followers. Listed companies were an indispensable stakeholder in our ecosystem and their engagement has greatly diversified our content offerings, thereby increasing user stickiness and retention. Leaf Li: Daniel Yuan: Next, I’d like to invite our CFO, Arthur, to discuss our financial performance. Arthur Chen: Thanks, Leaf and Daniel. Please allow me to walk you through our financial performance in the first quarter. All the numbers are in Hong Kong dollar unless otherwise noted. Our total revenue was HKD 2.2 billion, an increase of 349% year-over-year and 86% Q-on-Q. Brokerage commission and handling charge income was HKD 1.3 billion, an increase of 343% year-over-year and 84% Q-on-Q. The growth was mainly driven by 278% year-over-year of our total trading volume increase. Our blended commission rate and our clients trading velocity remain resilient, compared with last quarter. Interest income was HKD 659 million, an increase of 356% year-over-year and 96% Q-on-Q. The increase in margin financing interest income was mainly driven by the strong growth in daily average margin financing balance, higher IPO financing interest income, due to a very active Hong Kong IPO market in the first quarter and increase in our security borrowing and the lending business. Other income was HKD 221 million, an increase of 370% year-over-year and 69% Q-on-Q, a strong growth was primarily, driven by an increase in our IPO subscription service charge income and the currency exchange service income. In terms of costs, our total costs was HKD 443 million, an increase of 276% year-over-year and 83% Q-on-Q. Brokerage commission and handling charge expenses were HKD 214 million, an increase of 327% from HKD 50 million in the first quarter of 2020. The increase was largely in line with the growth of our brokerage commission and handling charge income. Interest expenses was HKD 168 million, an increase of 406% from HKD 33 million in the first quarter of 2020. The growth was primarily due to higher margin financing interest expenses and an increase in our security borrowing and the lending business. Operator: Certainly, sir. Ladies and gentlemen, we will now begin the question-and-answer session. We have our first question coming from the line of Katherine Liu from Morgan Stanley. Please go ahead. Katherine Liu: Thank you very much for giving me this opportunity to ask questions. This is Katherine from Morgan Stanley. So I have two questions to raise. First is like, management please give some introduction or some briefing in terms of the second quarter this year trend in terms of trading velocity, client acquisitions, growth rates, et cetera. And also in light of the first quarter, strong growth, will management give guidance in terms of the full-year, for example, growth rates in paying clients, et cetera. Arthur Chen: Sure, Katherine. Let me answer your second question first. I will show you our clients breakdown in the first quarter. I will leave the second trend – the second quarter trend and also the – your questions about the guidance to Robin and Leaf. Robin will also give you some colors in terms of our client acquisitions and also the client profile in Singapore, these particular markets. In the first quarter, on a flatter basis, Singapore and the U.S. accounts for 25% of our new paying clients acquired in the first quarter. The remaining 75%, was almost evenly split within Mainland China and also Hong Kong. I think slightly higher in Hong Kong part. I will leave Robin and Leaf to give you a comment about your first question. Leaf Li: Although, we have achieved 39% of our full-year paying client growth target in the first quarter, for the time being, we will not adjust our full-year target. Well, we definitely believe that our product has very differentiated value proposition to overseas markets. And in fact, since we enter the Singapore market officially in March, we have seen very strong client growth and that momentum has continued into the second quarter. So we also recognize the brokerage business is positively correlated with the market performance, with market sentiments with the number of IPOs. And we understand that right now the market has disagreements over how the market performance was bought for the rest of the year. So we will not adjust our full-year, kind of, pinpoint growth target for now. And we may give a updated guidance during our 2Q earnings call if needed. Robin Xu: Well, we have seen that, the market experienced some level of pull back since mid-February. And we believe that our user’s trading sentiment has been affected more or less and we think that’s perfectly normal. We feel like the markets don’t get a lot of attention right now and kind of under the rotation from growth to value stocks. There are still a number of stocks that are performing really, really well. And from the standpoint of our client assets, we have seen that from March 1st to last Friday, which is May 16, almost on every single trading day, we see a positive net asset inflow except for a couple of trading days. So it’s very positive sign that our clients are continuously putting efforts into our platform. And for us, paying client number, paying client retention and client asset are our three KPIs and we attach much more importance to these three matrices than some short-term volatilities in the client’s trading volume. Operator: Thank you. We have our next question, this is coming from the line of Jacky from China Renaissance. Please go ahead. Jacky Zuo: So congrats on the great results. I have two questions: number one, is about our competition. We actually saw some competitors, for example, in Hong Kong market increased – increasing their marketing efforts. And we also hear some Asia brokers may enter the U.S. and the Hong Kong Stock trading business. So regarding the potential increase in competition for our markets and our customers from Mainland and Hong Kong. Do we concern about our customer acquisition costs and the trading commission pricing pressure? And number two is about housekeeping question, could you provide us a rough breakdown of our interest income and also other revenue? Thank you. Arthur Chen: Sure, Jacky. Let me answer your second question in terms of housekeeping financial numbers first. I will leave the first question to my – again, colleagues, our CEO Leaf. In terms of the interest income breakdowns, roughly a lot interest income are rising from the margin financing account for 60% to 65% of total interest income. The remaining interest income naturally derived from our client’s idle cash deposit. And also for – in terms of other incomes, actually these two major parts, one is IPO subscription service charge, i.e., normally we charge HKD 50 to HKD 100 per persons, when each participate – participant in the Hong Kong IPOs. The other significant part is the foreign exchange, the service charge. Many of our clients trade in – both in Hong Kong and the U.S. markets, so they do have the demand for the foreign exchange. These two parts, I think roughly will contribute 70% to 75% of our total as a income. The remaining part will belong to such as the distribution income from our wealth management products and other service offerings. Thank you. Leaf Li: So from our inception, we operated in a very crowded market. And we don’t think the market is going to get less competitive going forward. And we indeed have seen some players offering zero commission. So we don’t think the change in the competitive landscape will have a downward pressure on our commission rate. Because in Hong Kong, here’s the stamp duty, which is 10 bps. And for us, we offer 3 bps for Hong Kong trading and the marginal benefits for our clients from lowering our commission rate beyond that 3 bps is really low. And for some of the Asian brokers, they already have Hong Kong license entities. And besides, we’ve also seen some other online brokers that want to enter the Hong Kong local market. So maybe I’ll talk a little bit more about the online brokers, due to similarities in the business model. First of all, we definitely welcome online brokers to enter the Hong Kong markets. With more of these players entering the Hong Kong markets, we can educate the market together and helping online brokerage industry as a whole gain more industry recognition. Now there are two major types of online brokers that provide Hong Kong Stock trading services. And the first type are the Hong Kong brokers that are licensed by SFC and hold SFC licenses and are regulated by the SFC and Futu is an example of this first type. And the second type are the online brokers that holds licenses of the third domicile and is not regulated by the Hong Kong SFC, for example, the license for New Zealand, and this is the second type using the third-party domicile license to provide trading in Hong Kong. And as we all know, the SFC has more stringent regulatory requirements than some other markets and are more prudent when given our licenses. So for the second type of online brokers that we just mentioned. If they are to get a license in Hong Kong that they can solve the issue of regulatory integrity in advance. And from the regulatory standpoint, SFC will not allow the online brokers to operate under a more relaxed regulatory framework. This means that once the online brokers hold licenses, they’ll need to migrate their existing clients and their existing businesses into the new entity that is regulated by the SFC and this issue cannot be solved very well, it’s highly unlikely that they will get a license in Hong Kong. And I think that’s probably why another online brokerage peer of ours have been talking about getting the license in Hong Kong soon for the past three years, but still have not managed to get one, because based on our understanding under normal circumstances, there is no way that it would take so long to apply for a new Hong Kong brokerage license. And secondly, we don’t think that the potential entry is other online brokerage companies will have a negative impact on future market share in Hong Kong. Well, the first reason is that, financial services, it really takes a big position for our clients to chose a financial services platform. And there is the psychological barrier from clients to actually truck their assets with a financial services platform. And for Futu, we have very outstanding shareholder base. We have shareholders like Tencent that really instill trust into our brand. And on top of that, we have spent the past eight years cultivating our brand image in Hong Kong, gaining user recognition and capturing the mindshare of the Hong Kong local users. And for a financial services company that is new to Hong Kong, it will take a lot of time for them to get the same level of trust that we have been able to garner in the past eight years. And secondly for the newcomers and they can only be converted if they can offer very differentiated value proposition. Otherwise, it will be very difficult for them to replace the existing platforms. And Futu has built a very comprehensive business, has huge entry barriers. And we’ve invested significantly into our account opening, into our trading infrastructure, market information and services, and social community, etc. And many of our product offerings really set industry standards. And the other online brokerage peers need to spend a lot of time to catch-up to where we are today, let alone offering differentiated products and services. On top of that, we have never stopped innovating. And the third point is the regulatory contributing issue that we just mentioned. And as we discussed earlier and some of the online peers have already started acquiring Hong Kong local clients without their Hong Kong license. And after they acquired the license, they probably will spend a lot of time migrating their existing Hong Kong clients to these new entity that is heavily regulated by the SFC and has really stringent KYC and AML procedures. And this will be a very cumbersome process, definitely with some sort of attrition. And for the other parties that have not operated in Hong Kong so far, after they got the license, they don’t need to, kind of, kick start a very stringent account opening KYC procedure under the supervision and SFC. And this will take time for them to adjust to and take time for them to get familiarized with. And fourthly, the margin financing business is highly contingent on the capital – on the company’s capital base. And the margin financing capital needs to be gradually accumulated through the long-term collaboration with the commercial banks in Hong Kong. In the Hong Kong based on SFCs regulation, the margin financing balance that as broker can support is limited to five times as its capital base. So first of all, they need to inject a lot of capital into their licensed entity in Hong Kong to bolster their net assets. And on top of that, they need to secure additional financing from the commercial banks in Hong Kong. And from our experience, the Hong Kong commercial banks are generally very conservative and they’re only willing to offer additional credit lines after, kind of, a long-term communication and long-term collaboration. So it’s impractical for these newcomers to get to garner a lot of capital in the short period of time and this will definitely put constraints on the margin financing business, especially the IPO margin financing business. And we realized that, some of the other peers are trying to migrate their clients from the interactive broker accounts to their own account system. And if their own account system is under the supervision of SFC, the margin financing capital issue that we just mentioned will be further enhanced. The fifth point is that the Hong Kong execution and clearing system need a lot of capital and time to invest and the R&D takes – is a very lengthy process. And Futu spent eight years to construct a highly stable and scalable execution and clearing system with a 99.96% service availability rate. And this very advanced trading system, has high entry barriers. And when the other brokers enter the Hong Kong market – in the short period of time, they probably need to rely on a third-party vendor to provide this execution system, which means that the stability of this system will be outside of their control for a considerable amount of time. So this may lead to trade congestion issues when there is extreme market volatility or when IPOs take place. So in the short-term, it will be very difficult for them to match the client servicing quality that Futu can provide. And the last point I want to make is that we have never stopped innovating and progressing and we still keep that amazing mentality when we entered into the Hong Kong market and we believe that additional competition in the Hong Kong market will push us to do better. Thank you. Jacky Zuo: Thank you. Operator: Thank you. We have our question coming from the line of Zeyu Yao from CICC. Please go ahead. Zeyu Yao: Thanks, management. This is Zeyu Yao from CICC. First of all congrats to our exciting results. I see our existing business were on track and I was wondering, if there is any possibility that we will apply for new brokerage licenses to serve more customers in other areas or launch more trading products like Bitcoin or other digital currency? Thanks. Arthur Chen: Okay. Thank you, Zeyu. Let me answer your first question. I will leave the second question to my colleagues, our Senior Vice President, Robin Xu, for more service and products in our pipelines. For the new license, actually, I think you are right, we are doing some preliminary studies in other international markets, in particular, in the Asian countries. Therefore, as Leaf mentioned in the opening remarks, we do think Singapore is a very important gateway for entering into the Asian market as a whole. But now it’s still in a very preliminary stage. Also, we are doing some feasibility studies in other English language speaking country as well. Robin Xu: So we’re planning to launch crypto trading to our international clients in the second half of this year. And also, we’ll plan to roll out more futures under the CME futures. Thank you. Zeyu Yao: Thank you. Operator: Thank you. We have the next question, this is coming from the line of Zoey Zong from Jefferies. Please go ahead. Zoey Zong: Hi, management. Thanks for taking my question. This is Zoey from Jefferies. Congratulations on the strong first quarter results and I have a follow-up question on the digital currency. So regarding digital currency at this point, we have noted that Association of China have announced that to balance financial institutions and payment companies from related to crypto currency transaction. I’m wondering what about Futu’s digital currency this year and will China’s to currency have following effects on consumers Robin Xu: We are very much aware of the different regulatory frameworks under different jurisdictions. And actually, we’re in the process of applying for digital currency-related licenses in U.S., Singapore and Hong Kong, but what we know for sure is that we will not offer digital currency trading services to mainland China users. Thank you. Zoey Zong: Thank you. Operator: The next one comes from the line of Emma Xu from BofA Securities. Please go ahead. Emma Xu: So congratulations on the very strong results. I have two questions, the first question is about the margin financing business. After the capital – after the follow-on offerings in fourth quarter, Futu further in April – Futu further strengthened it’s ESOP base. So will you try to increase the ratio of margin financing and security loan balance as a percentage of total client assets? And the second question is about client acquisition. You mentioned that 50% of the new client is for organic growth. Then how about the other half, what the acquisition channel for the other half of client statistically and pay more attention about inter clients. How much that we contribute to the new client? And how do you record it to those retail clients, will you recorded them as a new paying client when the stock is listed? Or you will wait and hear their stock are vested? Thank you. Arthur Chen: Thank you very much. I will answer the first question. I will leave the second question to my colleagues, Robin and Daniel. Number one, I think we value our paying clients from a DCF – PCF value perspective, i.e., we more care about their lifetime values rather than the near-term P&L they can contribute in terms of our top line or bottom line. Therefore, I think we will not very aggressively encourage our clients to use the margin, because the margin financing involve very high risks. Therefore, I think in our mentality, investment education, how to let our investors know the risk is far more important of our near-term monetization. If you look at our margin balance – financing balance versus our total client assets ratio, this risk ratio historically is in the range of 5% to 7%. I think, definitely after we finish our follow-on placement, we do have more sufficient capitals to support our margin financing business. And in particular, our IPO subscription service in Hong Kong. But we will not intentionally to push up our clients' margin usage unless they know the risks. Thank you. Daniel Yuan: Hi, I’m Daniel. I’ll take your second question on client acquisition. So about 50% of our new paying clients are from organic growth, then about 15% are from ESOP and group account opening. And the rest, 35% is roughly evenly split between online and offline advertising as well as the third-party channel partners. So definitely, we think about the high-profile IPOs are conducive to our client acquisition, but it’s very difficult for us to attribute certain client base to maybe one or two single IPOs. But we generally kind of observe an increase and uptick in our client acquisition before these IPOs take place. But it’s very difficult to ascertain, which clients come specifically for the IPOs. And for case, like you mentioned, so for employees that have stock options, right now, they’re not counted as our paying clients. Thank you. Emma Xu: Operator: Thank you. As we do not have any further questions, I would like to hand the conference back to our host, Mr. Daniel Yuan. Please take over. Daniel Yuan: Thank you, operator, and thank you all for joining the earnings call today. On behalf of the Futu management team, I would like to thank you for joining our earnings call and if you have any additional questions, please do not hesitate to ask me or any of our Investor Relations representatives. Thank you and good night. Operator: Thank you ladies and gentlemen. That concludes the conference today. Thank you all for your participation. You may now disconnect now.
Futu Holdings Limited (FUTU) Upgraded by Jefferies: A Comprehensive Analysis
- Jefferies upgraded Futu Holdings Limited (NASDAQ:FUTU) to a "Buy" rating, highlighting its impressive financial performance in Q3 2024.
- Futu reported a 29.6% increase in total revenues and a 20.8% rise in non-GAAP adjusted net income, indicating strong financial health and operational efficiency.
- The company's global user base and total client assets have seen significant growth, with a 48.1% increase in total client assets year-over-year.
On November 19, 2024, Jefferies upgraded Futu Holdings Limited (NASDAQ:FUTU) to a "Buy" rating, with the stock priced at $58.24 at the time. Futu Holdings, the parent company of Moomoo, is a tech-driven online brokerage and wealth management platform. It competes with other online brokerages like Robinhood and E*TRADE.
Futu's financial performance in the third quarter of 2024 has been impressive. The company reported total revenues of $442.3 million, a 29.6% increase from the previous year. This growth is supported by a 20.8% rise in non-GAAP adjusted net income, reaching $180 million. These figures highlight Futu's strong financial health and operational efficiency. The company's global user base has expanded significantly, surpassing 24.1 million, with paying clients nearing 2.2 million. This represents year-over-year increases of 14.4% and 33.1%, respectively. Such growth indicates Futu's successful strategy in attracting and retaining clients in a competitive market.
Futu's total client assets have also seen substantial growth, reaching $89.2 billion, a 48.1% increase year-over-year. The company has experienced strong growth in newly penetrated markets like Japan, Canada, and Malaysia, with double-digit increases in account openings and client assets. This expansion underscores Futu's effective global market penetration. Despite the positive financial results, FUTU's stock is currently priced at $86.70, experiencing a 6.07% decrease. The stock has fluctuated between $86.58 and $91.87 during the day, with a market capitalization of approximately $4.06 billion. This volatility reflects the dynamic nature of the stock market and investor sentiment.
Futu Holdings Limited (FUTU) Upgraded by Jefferies: A Comprehensive Analysis
- Jefferies upgraded Futu Holdings Limited (NASDAQ:FUTU) to a "Buy" rating, highlighting its impressive financial performance in Q3 2024.
- Futu reported a 29.6% increase in total revenues and a 20.8% rise in non-GAAP adjusted net income, indicating strong financial health and operational efficiency.
- The company's global user base and total client assets have seen significant growth, with a 48.1% increase in total client assets year-over-year.
On November 19, 2024, Jefferies upgraded Futu Holdings Limited (NASDAQ:FUTU) to a "Buy" rating, with the stock priced at $58.24 at the time. Futu Holdings, the parent company of Moomoo, is a tech-driven online brokerage and wealth management platform. It competes with other online brokerages like Robinhood and E*TRADE.
Futu's financial performance in the third quarter of 2024 has been impressive. The company reported total revenues of $442.3 million, a 29.6% increase from the previous year. This growth is supported by a 20.8% rise in non-GAAP adjusted net income, reaching $180 million. These figures highlight Futu's strong financial health and operational efficiency. The company's global user base has expanded significantly, surpassing 24.1 million, with paying clients nearing 2.2 million. This represents year-over-year increases of 14.4% and 33.1%, respectively. Such growth indicates Futu's successful strategy in attracting and retaining clients in a competitive market.
Futu's total client assets have also seen substantial growth, reaching $89.2 billion, a 48.1% increase year-over-year. The company has experienced strong growth in newly penetrated markets like Japan, Canada, and Malaysia, with double-digit increases in account openings and client assets. This expansion underscores Futu's effective global market penetration. Despite the positive financial results, FUTU's stock is currently priced at $86.70, experiencing a 6.07% decrease. The stock has fluctuated between $86.58 and $91.87 during the day, with a market capitalization of approximately $4.06 billion. This volatility reflects the dynamic nature of the stock market and investor sentiment.
Futu Holdings Limited (NASDAQ:FUTU) Shows Promising Growth and Analyst Optimism
- The consensus price target for Futu Holdings Limited (NASDAQ:FUTU) has increased by 28.5% over the past year, indicating strong analyst confidence.
- Futu has been upgraded to a Zacks Rank #1 (Strong Buy), reflecting positive earnings prospects and potential for stock value recovery.
- Despite challenges, Futu's strategic initiatives and expansion of services are expected to contribute to long-term wealth building for investors.
Futu Holdings Limited (NASDAQ:FUTU) is a key player in the online brokerage and wealth management industry, primarily operating in Hong Kong and expanding internationally. The company offers a variety of services such as trading, clearing, settlement, margin financing, and securities lending. Through its platforms, Futubull and moomoo, Futu provides online wealth management services and engages users via the NiuNiu Community.
The consensus price target for Futu's stock has shown a positive trend over the past year. Last month's average price target was $116.7, compared to $100.12 last quarter and $90.8 last year. This represents a 28.5% increase, indicating growing optimism among analysts about Futu's potential for growth and value creation. This optimism is further supported by Futu's recent upgrade to a Zacks Rank #1 (Strong Buy), reflecting positive earnings prospects.
Despite a recent decline in stock value, Futu has shown signs of potential recovery. A hammer chart pattern suggests the stock may have found support, indicating a possible trend reversal. This technical indicator, along with upward earnings estimate revisions, supports the positive sentiment. Analyst Leon Qi from Daiwa has set a price target of $64, reinforcing a favorable outlook for Futu's future performance.
Futu's Q2 2024 earnings conference call, held on August 20, 2024, featured key company figures and analysts from major financial institutions. Discussions likely focused on Futu's financial performance and strategic initiatives. The company reported strong growth in registered and paying clients, client assets, and total revenues. However, challenges such as margin compression and high operating expenses are impacting earnings growth, keeping the stock price restrained.
Futu Holdings is recommended for buying when its stock price is in the 50s and selling in the high 60s or 70s, as part of a long-term wealth-building strategy. As Futu continues to expand its international presence and enhance its service offerings, investors and stakeholders should monitor its developments and market performance in the competitive financial services industry.
Futu Holdings Limited (NASDAQ:FUTU) Shows Promising Growth and Analyst Optimism
- The consensus price target for Futu Holdings Limited (NASDAQ:FUTU) has increased by 28.5% over the past year, indicating strong analyst confidence.
- Futu has been upgraded to a Zacks Rank #1 (Strong Buy), reflecting positive earnings prospects and potential for stock value recovery.
- Despite challenges, Futu's strategic initiatives and expansion of services are expected to contribute to long-term wealth building for investors.
Futu Holdings Limited (NASDAQ:FUTU) is a key player in the online brokerage and wealth management industry, primarily operating in Hong Kong and expanding internationally. The company offers a variety of services such as trading, clearing, settlement, margin financing, and securities lending. Through its platforms, Futubull and moomoo, Futu provides online wealth management services and engages users via the NiuNiu Community.
The consensus price target for Futu's stock has shown a positive trend over the past year. Last month's average price target was $116.7, compared to $100.12 last quarter and $90.8 last year. This represents a 28.5% increase, indicating growing optimism among analysts about Futu's potential for growth and value creation. This optimism is further supported by Futu's recent upgrade to a Zacks Rank #1 (Strong Buy), reflecting positive earnings prospects.
Despite a recent decline in stock value, Futu has shown signs of potential recovery. A hammer chart pattern suggests the stock may have found support, indicating a possible trend reversal. This technical indicator, along with upward earnings estimate revisions, supports the positive sentiment. Analyst Leon Qi from Daiwa has set a price target of $64, reinforcing a favorable outlook for Futu's future performance.
Futu's Q2 2024 earnings conference call, held on August 20, 2024, featured key company figures and analysts from major financial institutions. Discussions likely focused on Futu's financial performance and strategic initiatives. The company reported strong growth in registered and paying clients, client assets, and total revenues. However, challenges such as margin compression and high operating expenses are impacting earnings growth, keeping the stock price restrained.
Futu Holdings is recommended for buying when its stock price is in the 50s and selling in the high 60s or 70s, as part of a long-term wealth-building strategy. As Futu continues to expand its international presence and enhance its service offerings, investors and stakeholders should monitor its developments and market performance in the competitive financial services industry.
Futu Earns an Upgrade at JPMorgan
JPMorgan analysts upgraded Futu Holdings (NASDAQ:FUTU) from Neutral to Overweight, setting a price target of $64.00.
The bank's assessment is based on the observation that Futu's share price has declined by 25% in the past two months, underperforming the S&P 500 by 31 percentage points. The analysts attributed this weakness to a modest shortfall in the company's third-quarter 2023 results and perceived risks to its net interest income (NII), which constituted about 55% of its revenue in the first nine months of 2023. These concerns have been linked to expectations of interest rate cuts.
However, the analysts believe that the market's reaction to these factors is exaggerated. They pointed out that only half of Futu's NII is sensitive to interest rates, and they anticipate that any negative impact on NII will be offset by an increase in trading volume.
Additionally, the analysts highlighted Futu's potential growth opportunities, particularly from its expansion into overseas markets like Japan and the anticipated launch of its cryptocurrency business in mid-2024. These developments could positively affect the growth of Futu's client base and assets under management (AUM).
Futu Stock Surges 9% After BofA Securities’ Double Upgrade
Futu Holdings (NASDAQ:FUTU) saw a rise of over 9% in its stock price on Tuesday after BofA Securities upgraded its rating from Underperform to Buy. The bank also increased its price target for the stock to $62.82 from $32.15.
The upgrade was prompted by BofA's increased optimism regarding the stock. They highlighted the stabilization of China's regulations, along with the current sentiment and valuation being at a low point. Positive advancements in Hong Kong and international markets further supported the upgrade.
Consequently, BofA adjusted its projected earnings per share (EPS) for the years 2023-2025, with increases ranging from 7% to 24%. The target price-to-earnings ratio (P/E) was also modified, shifting from 8x to 14x. Despite the adjustment, the P/E remains below the midpoint of the trading range, reflecting recent regulatory tightening in China.
