JPMorgan released a research report maintaining an "overweight" rating on Futu Holdings and raising the target price from $160.00 to $170.00 on March 14, 2025. JPMorgan pointed out the following highlights:
4Q24 was a strong beat: Futu’s profit growth was 113% y/y in 4Q24, with new paying client growth of 214.7k, and guided 800k net new paying clients in 2025. Meanwhile, Futu's net asset inflow was robust, and trading volume growth in Futu’s platform is significantly ahead of the HK/US markets, partly supported by the rise in velocity and clients’ asset growth.
Management gave strong guidance during the results briefing: On the positive side, management indicated stronger business momentum in Q1 2025, with new paying client growth, net asset inflow, and trading volume expected to increase from a high base in Q4, and the commission rate expected to remain stable QoQ. On the negative side, management guided to a FY 2025 client acquisition cost (CAC) of HK$2,500-3,000.
JPMorgan expects Futu to re-rate on the consensus EPS upgrades and multiple rating: JPMorgan has revised up Futu’s 2025-27 earnings by 7.1%/7.3%/7.1% after factoring in 4Q results and management guidance for 2025. With stronger-than-expected paying client growth in 4Q24 and robust guidance on client acquisition in FY25, JPMorgan expects Futu to re-rate to ~23x 2025 PE based on their PT of $170.
Downside risks include:
Weakness in China tech stocks, leading to lackluster trading volume growth;
Regulatory risk;
Lower-than-expected growth in the number of paying clients.
Upside risks include:
Higher-than-expected growth in paying client numbers;
Stronger-than-expected trading volume growth;
Better-than-expected operating efficiency improvement.
Today, after hitting the high near 24,000 in the early session and entering bearish positions, the index fell sharply by nearly over 600 points, immediately recouping yesterday's losses significantly.
Moreover, today it broke the new high again, reaching a maximum of 24,076, but by the end of the market, it fell back by about 70 points, producing a bearish candle. The current trend has not yet been broken, but from the previous low until now, it has risen close to 6,000 points. It is believed that those with positions can continue to hold until there is a clear trend reversal for profit-taking. Those without positions can wait for a pullback to get in. Actually, it is hoped for a quick pullback, as it allows for entry and also provides a healthy breath.
Currently, the outlook remains the same as before. It is believed that even if there is a pullback, it shouldn't be too deep. However, if Futures fail to stabilize and close below 22,350, there may still be room for decline. The chance of Futures falling below 21,400 in the short term should be low, so it is considered that if a significant pullback occurs, it presents a good opportunity to incrementally go long. Recently, there has been a consistent approach to not hold positions overnight, only focusing on immediate trades, as there is no high chasing and no casual short selling.
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