On May 29th, 2024, China International Capital Corporation (CICC) released a research report maintaining a "outperform" rating on Futu Holdings and raising their target price to $98. In the report, CICC pointed out the following:
In Q1 2024, Futu Holdings' total revenue increased by 9% quarter-on-quarter and 4% year-on-year to HKD 2.59 billion, mainly due to the better-than-expected growth in the number of paying clients and improvement in customer transaction volume.
In Q1 2024, the number of new paying clients was 177,000, bringing the total number of paying clients to 1.89 million. Among them, new users from Hong Kong and Singapore showed double-digit growth on a quarterly basis, accounting for about one-third of the total, and new users from Malaysia accounted for about one-third. Account openings in Japan increased by 200% compared to the previous quarter, and new paying clients in Canada increased by 181% on a quarterly basis.
The total client assets increased by 7% quarter-on-quarter and 11% year-on-year to HKD 51.79 billion. Both margin financing balances and Wealth Management AUM achieved a quarter-on-quarter increase.
Trading volume improved significantly, driving steady growth in trading commission income, while interest income remained stable with a slight decrease.
Considering the better-than-expected growth in new users, CICC raised its earnings forecast for 2024 and 2025 by 4% and 7% respectively to HKD 5.2 billion and HKD 6.2 billion. Futu Holdings' current trading P/E ratios for 2024 and 2025 are 15x and 13x respectively.
Risk factors:
Weak market transactions and business conditions
Industry competition exceeding expectations
International expansion falling behind expectations