On August 21, UBS released a research report maintaining a BUY rating on Futu Holdings, with a target price of US$87.00. UBS pointed out the following highlights:

• Discussion of investors' interests and key drivers: 1) paying clients acquisition in Q2 and FY24; 2) earnings pressure from rate cuts is manageable; 3) Japan and Malaysia market development.

• In Q3, UBS expects solid paying client acquisition and strong client asset net inflow. Trading volume would likely book another QoQ growth, driven by both stock asset expansion and higher velocity. However, on a QoQ basis, blended fee rate may be diluted by higher US stock option prices amid a volatile market. UBS estimates that 3QTD CAC is largely on par with the Q2 level.

• Valuation: Factoring in faster-than-expected overseas expansion and more conservative projection on clients' investment performance, UBS lifted FY24/25/26E new paying clients and revised client AUM. Further considering lower blended fee rate, normalized other income and net loss of Airstar Bank, UBS trim price target to US$87.00 from US$90.00 with a BUY rating.

Key risks to Futu Holdings include:

(1) lower-than-expected international expansion (especially in the Japan and Malaysia market);

(2) worse-than-expected market conditions.