On November 20, China Renaissance released a research report maintaining a "Buy" rating on Futu Holdings and raising the target price from US$127.50 to US$134.80. China Renaissance pointed out the following highlights:

• Strong 3Q24 operating metrics and robust 4Q24 QTD run rate. Futu acquired 154,000 new paying clients in 3Q24 (vs 155,000 in 2Q24) with Malaysia being the largest contributor, followed by HK and Singapore and Japan. As for its performance in 4Q24 QTD, management noted 1) trading volume rose QoQ nicely for both US and HK stocks, 2) new paying clients run rate surpassed last quarter.

• Multiple new product offerings to attract new paying clients and boost client assets. With recent crypto assets price rally, Futu has seen its user penetration and crypto trading volume picking up, and new client acquisitions in HK increasing. On new product offerings, Futu rolled out US Stock Dividend Reinvestment Plan in HK, NISA Savings Account, Mutual Funds, and US Margin Trading and Japan Options Trading in Japan. It also rolled out MMFs and US Options Trading in Malaysia, making it the first broker offering this service in the country.

• China Renaissance raises their 2024E-26E non-GAAP net profit forecasts by 3%-6% and raises their Target Price to US$134.80 from US$127.50, on unchanged 22.0x 2025E P/E. China Renaissance believes its strong customer acquisition, higher client assets and market’s increasing interests in crypto trading would deliver a better earnings outlook for Futu.

Key risks include:

• market downturn

• intensifying competition

• tightening regulations