On October 7, CICC released a research report maintaining an "Outperform" rating on Futu Holdings and raising the target price to $188. The company's stock price has increased by 125% over the past three weeks. CICC believes that the main reasons for this shift have gradually transitioned from the first two points to the third point, as detailed below:
Investor concerns about the negative impact of the Federal Reserve's interest rate cuts on company performance have eased.
Rapid growth in customer acquisition in new markets: The company continues to experience rapid customer acquisition growth in markets such as Singapore, Japan, Malaysia, and North America, and has consistently raised its guidance for new customer acquisition for the year.
The rebound of Chinese concept stocks and the Hang Seng TECH Index: Futu's stock price has benefited from the active trading of Chinese assets.
Futu is currently trading at 25x/18x P/E for 2024/2025 estimates. Due to an upward revision in customer asset growth rates and turnover rate assumptions, we have raised our earnings forecasts for 2024/2025 by 9% and 28%, respectively, to HKD 5.5 billion and HKD 7.5 billion. Considering the active market sentiment, we are raising the target price to $188, which corresponds to 37x/27x P/E for 2024/2025 estimates and represents a 47% upside potential. We maintain an "Outperform" rating on Futu Holdings.
Risk Factors:
Market trading volume has significantly declined.
Industry competition exceeds expectations.
International expansion falls short of expectations.
