On May 29, Jefferies released a research report, maintained a "Buy" rating and raised the target price from $70.8 to $88.4. Jefferies pointed out the following highlights:

• Total revenue grew 3.7% YoY to HK$2,592.5 million, 1.5% and 0.8% above consensus and Jefferies estimate, respectively.

• In 1Q24, Futu added about 177K new paying clients (59K in 4Q23), with total paying clients reaching about 1.89 million. About 1/3 of the new paying clients came from its new Malaysia market. Total client assets increased by 11.2% YoY to HK$517.9 billion, margin financing and securities lending balance increased by 13.6% QoQ and 8.9% YoY to HK$37.6 billion.

• Key takeaways from the conference call. 1）In 1Q24, net asset inflow was over HK$35bn, thanks to strong inflow from Hong Kong, Singapore and new markets like Malaysia and Japan. 2）In 1Q24, the number of registered clients in Japan increased by 200% QoQ. In Malaysia, Moomoo attracted over 100K registered clients within six weeks of brokerage business launch.

• Jefferies views Futu's proprietary technology infrastructure as its key strength over peers, which should help save costs and improve operating efficiency. Jefferies sees Futu as ahead of other potential competitors by around 2-3 years in terms of financial licenses obtained, technology, and community etc.

• Jefferies maintains "Buy" rating and raises the price target on Futu Holdings to US$88.4 (prior US$70.8), based on 2025E EPS of HK$37.6 and 18.3x P/E, factoring in the latest business updates.

Upside risks include:

1) Improvement of commission fee rates and interest rates;

2) Stronger-than-expected investor demand;

3) Stronger-than-expected user growth and traffic conversion.

Downside risks include:

1) macro-headwinds impacting securities market trading volume in the US, HK and SG;

2) loss of market share due to competition;

3) lower-than-expected commission fee rate and interest rate;

4) unexpected restrictions on cross-border trading.