1Q21 preview: Expecting a strong quarter with accelerated overseas expansion

• Expecting strong quarterly results given new paying users of 273k in 1Q21. 

• Faster pace of overseas expansion in SG despite normalizing market activities. 

• Reiterate BUY with revised TP of US$178.00 (55x target P/E).

We expect Futu to report another record-high net profit in 1Q21, along with strong new paying user adds of 273k (vs. 99k in 4Q20). 

Futu noted better-than-expected user growth for its Singapore expansion, although we are starting to see normalized market activity as evidenced by lower stock ADT in the Hong Kong market and reduced daily client trades for competitors such as Interactive Brokers (IBKR, Not Covered). 

We remain positive on Futu as an InvestmentTech platform with a growing addressable market through overseas expansion and product cross-selling. 

We reiterate our BUY rating amid a recent share price pullback. 

Risks include: 1) Market downturn with reduced IPO pipeline; 2) intensifying competition.