Core Viewpoint - Futu Holdings Limited has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Outlook - The Zacks rating upgrade reflects an upward trend in earnings estimates, which is crucial for stock price movements [1][3]. - Futu Holdings is expected to earn $4.68 per share for the fiscal year ending December 2024, representing a year-over-year increase of 19.4% [5]. Earnings Estimate Revisions - Over the past three months, the Zacks Consensus Estimate for Futu Holdings has increased by 3.5%, indicating a positive revision trend [5]. - The correlation between earnings estimate revisions and near-term stock movements suggests that tracking these revisions can be beneficial for investment decisions [4]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with only the top 5% receiving a 'Strong Buy' rating, indicating superior earnings estimate revision features [6][7]. - Historically, Zacks Rank 1 stocks have generated an average annual return of +25% since 1988, showcasing the effectiveness of the rating system [4].

Core Viewpoint - Futu Holdings Limited (FUTU) has experienced a 7.8% decline in share price over the past week, but the formation of a hammer chart pattern suggests potential support and a possible trend reversal in the future [1] Technical Analysis - The hammer chart pattern indicates a potential bottoming out, with reduced selling pressure and a shift in control from bears to bulls [1] - The hammer pattern is characterized by a small candle body and a long lower wick, signaling a potential trend reversal when formed at the bottom of a downtrend [1] - Hammer candles can appear on various timeframes and should be used alongside other bullish indicators for confirmation [1] Fundamental Analysis - Recent upward revisions in earnings estimates for FUTU serve as a bullish indicator, correlating strongly with near-term stock price movements [1] - The consensus EPS estimate for the current year has increased by 3.5% over the last 30 days, indicating strong agreement among analysts regarding improved earnings potential [1] - FUTU holds a Zacks Rank of 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks, which typically outperform the market [1] - The Zacks Rank is a reliable timing indicator for investors to identify improving company prospects [1]

Group 1 - Futu Holdings Limited has completed a HKD440 million investment in Gravitation Fintech HK Limited, the parent company of Airstar Bank, a licensed virtual bank in Hong Kong [1] - Following this investment, Futu has become the second largest beneficial owner of Airstar Bank, holding indirectly 44.11% [1] Group 2 - Futu Holdings Limited is a technology company that offers fully digitalized financial services through its platforms, Futubull and moomoo [2] - The company provides a comprehensive range of investment services, including trade execution, margin financing, and wealth management, while also incorporating social media tools to enhance user connectivity [2] - Additionally, Futu offers corporate services such as IPO distribution, investor relations, and ESOP solution services [2]

Group 1 - Futu Holdings Limited has completed a HKD440 million investment in Gravitation Fintech HK Limited, becoming the second largest beneficial owner of Airstar Bank with an indirect ownership of 44.11% [1] - Futu is a tech-driven online brokerage and wealth management platform that offers fully digitalized financial services through its proprietary platforms, Futubull and moomoo [2] - The company provides a comprehensive range of investment services, including trade execution, margin financing, securities lending, and wealth management, while also incorporating social media tools to enhance user connectivity [2]

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Investment Rating - The report does not provide a specific investment rating for the company, but it suggests actively monitoring the stock due to positive market conditions and growth potential [2]. Core Views - The company reported a revenue of HKD 25.9 billion for Q1 2024, representing a year-over-year increase of 4% and a quarter-over-quarter increase of 9%. Net profit was HKD 10.4 billion, down 13% year-over-year but up 18% quarter-over-quarter [2]. - The brokerage commission income was HKD 10.8 billion, showing no year-over-year growth but a 20% increase quarter-over-quarter. Total trading volume reached HKD 13 trillion, up 10% year-over-year and 40% quarter-over-quarter [2]. - The company has raised its full-year guidance for net new funded clients to 400,000, up from an initial estimate of 350,000, due to strong customer acquisition in overseas markets [2]. Summary by Sections Financial Performance - Q1 2024 revenue was HKD 25.9 billion, with a year-over-year growth of 4% and a quarter-over-quarter growth of 9%. Net profit was HKD 10.4 billion, down 13% year-over-year but up 18% quarter-over-quarter. Non-GAAP net profit was HKD 11.2 billion, down 12% year-over-year and up 18% quarter-over-quarter [2]. - Brokerage commission income was HKD 10.8 billion, with a year-over-year growth of 0% and a quarter-over-quarter growth of 20%. Total trading volume was HKD 13 trillion, with a year-over-year growth of 10% and a quarter-over-quarter growth of 40% [2]. Customer Growth - The company added 177,000 new funded clients in Q1 2024, a quarter-over-quarter increase of 331% and a year-over-year increase of 199%. The total number of funded clients reached 1.89 million, with a year-over-year growth of 24% and a quarter-over-quarter growth of 10% [2]. - The total customer assets reached HKD 517.9 billion, with a year-over-year growth of 11% and a quarter-over-quarter growth of 7% [2]. Cost Management - The gross margin for Q1 2024 was 81.9%, down 6.5 percentage points year-over-year but up 0.2 percentage points quarter-over-quarter. Research and development expenses were HKD 340 million, with a rate of 13%, down 1 percentage point year-over-year [2]. - Sales expenses increased to HKD 290 million, with a rate of 11%, up 6 percentage points year-over-year, primarily due to the significant growth in new funded clients [2]. Market Outlook - The report indicates that the company is well-positioned to benefit from the rebound in Chinese assets and plans to launch higher-commission cryptocurrency trading services in Hong Kong and Singapore [2]. - The company is actively expanding its overseas market presence and diversifying its product offerings, which is expected to create new growth opportunities [2].

Core Viewpoint - Futu Holdings Limited (NASDAQ:FUTU) has been assigned a Buy investment rating following its strong financial performance in Q1 2024, with upward revisions in client growth guidance indicating a positive outlook for the company [1]. Financial Performance - Futu Holdings reported Q1 2024 revenue of HK$2,592.5 million, reflecting a +3.7% YoY increase and a +9.2% QoQ growth, surpassing market expectations by +1.2% [4]. - The diluted GAAP net profit per ADS for Q1 2024 was HK$7.46, down -11.6% YoY but up +18.2% QoQ, indicating a +8.0% earnings beat compared to consensus estimates [6]. - The company experienced a significant increase in trading volume, with Hong Kong and US trading volumes rising by +18.0% QoQ and +48.1% QoQ, respectively [5]. Client Growth and Market Expansion - Futu Holdings revised its FY 2024 new customer growth guidance upwards by +14.3%, from 350,000 to 400,000 net additions, following a strong Q1 performance where net new paying clients surged by +330.8% YoY to approximately 177,000 [8][9]. - The company has made notable progress in international markets, securing 100,000 paying users in Malaysia shortly after launching and reaching one million app downloads in Japan [8]. Cost Management and Efficiency - The decline in R&D and brokerage costs contributed to improved earnings, with R&D expenses down -5.5% YoY to HK$335.5 million and brokerage expenses down -16.5% YoY to HK$60.3 million [6][7]. - The company attributed the reduction in costs to stricter cost control measures and improved operating efficiency from transitioning to self-clearing for US operations [7]. Valuation Metrics - The current market valuation of FUTU is at 16 times the consensus next twelve months' P/E, significantly lower than its five-year average forward P/E ratio of 26 times, suggesting potential for valuation expansion as the company continues to grow its customer base [11].

Futu Holdings Limited (NASDAQ:FUTU) Q1 2024 Earnings Call Transcript May 28, 2024 7:30 AM ET Company Participants Daniel Yuan - Chief of Staff to CEO and Head of IR Leaf Li - Chairman and CEO Arthur Chen - CFO Conference Call Participants Chiyao Huang - Morgan Stanley Katherine Lei - JPMorgan Operator Hello, ladies and gentlemen, welcome to Futu Holdings First Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a ...

Client Growth - Total number of paying clients increased 23.5% year-over-year to 1,887,270 as of March 31, 2024[2] - New paying clients jumped by 330.8% year-over-year to 177,000, representing over 50% of the full-year guidance[4] Financial Performance - Total revenues increased 3.7% year-over-year to HK$2,592.5 million (US$331.3 million)[3] - Net income decreased 13.1% year-over-year to HK$1,035.1 million (US$132.3 million)[3] - Basic net income per American Depositary Share (ADS) was HK$7.53 (US$0.96), compared with HK$8.54 in the first quarter of 2023[13] - Net income for the three months ended March 31, 2024, was HK$1,035,133 thousand, down from HK$1,191,845 thousand in the same period of 2023, a decrease of about 13.1%[28] - Adjusted net income for the three months ended March 31, 2024, was HK$1,121,071 thousand, down from HK$1,267,955 thousand for the same period in 2023, a decrease of about 11.5%[34] Asset and Liability Management - Total client assets increased 11.2% year-over-year to HK$517.9 billion as of March 31, 2024[2] - Total current assets increased from HK$95,427,511 thousand as of December 31, 2023, to HK$105,582,064 thousand as of March 31, 2024, an increase of approximately 10.8%[23] - Total liabilities rose from HK$72,564,116 thousand as of December 31, 2023, to HK$81,662,755 thousand as of March 31, 2024, an increase of about 12.5%[25] - Total shareholders' equity increased from HK$24,568,736 thousand as of December 31, 2023, to HK$25,668,638 thousand as of March 31, 2024, an increase of approximately 4.5%[25] Trading and Revenue Metrics - Total trading volume in the first quarter of 2024 increased by 9.5% year-over-year to HK$1.3 trillion[2] - Daily average revenue trades (DARTs) increased 7.0% year-over-year to 549,854[2] - Margin financing and securities lending balance increased 8.9% year-over-year to HK$37.6 billion[2] - The company’s interest income for the three months ended March 31, 2024, was HK$1,354,166 thousand, up from HK$1,294,260 thousand for the same period in 2023, an increase of about 4.6%[27] Research and Development - Research and development expenses for the three months ended March 31, 2024, were HK$335,487 thousand, slightly lower than HK$354,899 thousand for the same period in 2023, a decrease of about 5.5%[28] Cash Management - The company’s cash and cash equivalents increased from HK$4,937,538 thousand as of December 31, 2023, to HK$6,643,541 thousand as of March 31, 2024, an increase of approximately 34.5%[23]

Core Viewpoint - Futu Holdings Limited reported its first quarter 2024 financial results, highlighting significant growth in client numbers and trading volumes, despite a decline in net income and gross profit compared to the previous year. Operational Highlights - The total number of paying clients increased by 23.5% year-over-year to 1,887,270 as of March 31, 2024 [2] - Registered clients rose by 15.4% year-over-year to 3,812,326 [2] - Total users grew by 12.3% year-over-year to 22.5 million [2] - Total client assets increased by 11.2% year-over-year to HK$517.9 billion [2] - Daily average client assets were HK$480.0 billion, up 6.0% from the same period in 2023 [2] - Total trading volume in Q1 2024 increased by 9.5% year-over-year to HK$1.3 trillion [2] - Daily average revenue trades (DARTs) rose by 7.0% year-over-year to 549,854 [2] - Margin financing and securities lending balance increased by 8.9% year-over-year to HK$37.6 billion [2] Financial Highlights - Total revenues increased by 3.7% year-over-year to HK$2,592.5 million (US$331.3 million) [3] - Total gross profit decreased by 3.9% year-over-year to HK$2,122.2 million (US$271.2 million) [3] - Net income decreased by 13.1% year-over-year to HK$1,035.1 million (US$132.3 million) [3] - Non-GAAP adjusted net income decreased by 11.6% year-over-year to HK$1,121.1 million (US$143.3 million) [3] Management Commentary - The company experienced a 330.8% year-over-year increase in new paying clients, totaling 177,000, marking the third highest quarterly growth in history [4] - New paying clients from Hong Kong and Singapore showed strong double-digit growth, while other markets saw triple-digit growth [4] - The launch in Malaysia attracted over 100,000 registered clients within six weeks, becoming the most downloaded financial app in the country [4] - Total trading volume increased by 40.0% quarter-over-quarter to HK$1.3 trillion, driven by heightened client interest in technology and high-dividend stocks [4] - Margin financing and securities lending balance reached an all-time high of HK$37.6 billion, up 13.7% sequentially [4] Wealth Management - Total client assets in wealth management were HK$64.0 billion, up 72.8% year-over-year and 11.1% quarter-over-quarter [5] - Bond holdings increased by 21.3% sequentially, driven by strong demand for U.S. treasury bills [5] - Wealth management asset balance in Singapore grew by 37.1% quarter-over-quarter [5] Cost and Expense Analysis - Total costs increased by 61.7% year-over-year to HK$470.2 million (US$60.1 million) [7] - Brokerage commission and handling charge expenses decreased by 16.5% year-over-year to HK$60.3 million (US$7.7 million) [7] - Interest expenses surged by 139.1% year-over-year to HK$312.8 million (US$40.0 million) [7] - Total operating expenses rose by 15.6% year-over-year to HK$929.5 million (US$118.8 million) [9] Income Metrics - Income from operations decreased by 15.1% to HK$1,192.7 million (US$152.4 million) [11] - Net income margin declined to 39.9% from 47.7% in the previous year [12] - Basic net income per ADS was HK$7.53 (US$0.96), down from HK$8.54 in the first quarter of 2023 [13]