FUTU(FUTU) 广发证券·2024-07-19 03:31Investment Rating - The report assigns a "Buy" rating to Futu Holdings (FUTU) with a target price of $88.68 per ADR [2] Core Viewpoints - Futu's globalization strategy, initiated in 2018, has driven significant growth across seven markets (Hong Kong, Singapore, US, Australia, Japan, Canada, Malaysia) with a CAGR of 51% in net profit from 2020-2023 [2] - The company's four core businesses (brokerage, wealth management, margin financing, and enterprise services) form a positive flywheel, enhancing customer stickiness and monetization potential [2] - Futu's strong R&D focus (15% R&D expense ratio) and self-licensing strategy (over 100 licenses globally) provide a competitive edge [2] Business Overview Brokerage Business - Futu's brokerage business leverages the "time machine effect" across different markets, with Hong Kong as its base (3.5% market share) and Singapore as a key growth market (25% estimated market share) [2] - The US market is strategically important but highly competitive, while Japan and Australia are in the growth phase [2] - Futu's brokerage revenue grew at a CAGR of 25% from 2020-2023 [2] Wealth Management - Futu's wealth management business, branded as "Elephant Wealth," focuses on high-quality and diversified product offerings, with significant growth potential in customer asset accumulation [2] - The business has seen a steady increase in customer assets, with a 12.4% share of total client AUM in Q1 2024 [19] Margin Financing - Margin financing is a pillar business for Futu, benefiting from rising interest rates and contributing to high interest income growth [2] - The business has shown steady growth, with interest income increasing significantly under the Fed's rate hike cycle [2] Enterprise Services - Futu provides comprehensive services to B2B clients, including IPO, IR/PR, and ESOP solutions, leveraging its technology to support companies throughout the listing process [2] - The enterprise services business helps Futu build long-term relationships with high-quality corporate clients and their employees [20] Financial Performance - Futu's revenue is projected to grow from HKD 7.6 billion in 2024E to HKD 14.5 billion in 2026E, with a CAGR of 13.5% [6] - Net profit is expected to increase from HKD 2.9 billion in 2024E to HKD 6.1 billion in 2026E, with a CAGR of 14.4% [6] - ROE is forecasted to remain stable at around 15% from 2024E to 2026E [6] Market Expansion Hong Kong Market - Futu dominates the online brokerage market in Hong Kong, ranking first in internet brokerage with a 3.41% market share in May 2024 [21] - The company has secured multiple licenses, including the rare Type 3 (leveraged foreign exchange trading) and Type 7 (automated trading services) licenses [33] Singapore and Malaysia - In Singapore, Futu's moomoo app ranks first in the financial app category, with a 25% market share among the target customer base [2] - The Malaysia market has shown rapid growth, with over 100,000 clients acquired within six weeks of launch [46] US Market - Futu obtained a full clearing license in the US in 2019, enabling it to provide clearing, settlement, and custody services independently [50] - The company focuses on differentiating itself through product experience and marketing, targeting the "middle market" between Robinhood and Charles Schwab [52] Japan Market - Futu entered the Japanese market with a focus on US stock trading, offering over 7,000 US stocks, the most among online brokers in Japan [58] - The company plans to expand its product offerings, including margin trading and fractional shares, to drive customer conversion [58] Australia and Canada - Futu's Australian and Canadian markets have shown strong customer acquisition, with Australian client assets growing 304% YoY in Q1 2024 [62] - Moomoo is ranked as the fourth-best online brokerage app in Australia and the top financial app in Canada's Google Play Store [62][63]