On May 29, BofA released a research report, optimistic about FUTU's robust client growth and asset inflows, and raised the target price from $81.00 to $85.80.

BofA pointed out the following highlights on FUTU:

• Futu's 1Q24 GAAP net profit rose 18.5% QoQ to HKD1,038 million, beating BofA estimates by 3%, driven by lower-than-expected client acquisition cost and stricter cost control.

• 1Q24 revenue rose 9.2% QoQ or 3.7% YoY to HKD2.6 billion, largely in line. New paying clients surged around 200% QoQ/330% YoY to 177k in 1Q24.

• BofA raises 2024-26E earnings estimates by 3-5%, lift their target 2024E P/E multiple from 17.5x to 18.0x on strong client growth, and raise their price target by 6% to USD85.80. BofA reiterate their Buy rating on Futu given improving market sentiment and encouraging developments in overseas markets and new products.

• Malaysia contributed ~1/3 of the new paying clients in 1Q, thanks to Futu's strong brand recognition, competitive products, and large user base, while HK/SG together accounted for another 1/3. MeanWhile, Japan's new paying clients saw triple-digit growth in 1Q.

Upside risks : Better-than-expected capital market condition, lower-than-expected competition and faster-than-expected client growth.

Downside risks : Stricter-than-expected regulations, large US/HK market correction and intensified competition.