FUTU(US:FUTU)2024-03-20 16:00Investment Rating - The report maintains an "Outperform" rating for Futu Holdings with a target price of US$68.34, based on a current price of US$56.40 [3][8][22]. Core Insights - Futu Holdings reported total revenue of HK$10 billion for FY23, representing a year-on-year increase of 31%, and a net profit after tax (NPAT) of HK$4.6 billion, up 46% year-on-year, although both figures were below market expectations [6][22]. - The growth in revenue and profit was primarily driven by an increase in paying clients, client assets, and higher blended commission rates and interest rates [6][22]. - The company is expected to add 350,000 new asset clients in 2024, with continued expansion into international markets such as Japan, Canada, and Malaysia [6][22]. Financial Performance Summary - For FY23, Futu Holdings achieved a total revenue of HK$10,008 million, with a net profit of HK$4,279 million, reflecting a 31% and 46% increase year-on-year, respectively [5][22]. - The company’s earnings per share (EPADS) for FY23 was HK$31.0, with a return on equity (ROE) of 18.85% [5][22]. - Revenue projections for the next three years are HK$10,792 million in 2024E, HK$11,964 million in 2025E, and HK$13,261 million in 2026E, with corresponding net profits of HK$4,877 million, HK$5,520 million, and HK$6,253 million [5][8][22]. Client Growth and Market Expansion - As of the end of 2023, Futu Holdings had 21.64 million registered users, a 10.5% increase year-on-year, and 1.71 million asset clients, up 15% year-on-year [6][22]. - The company’s total client assets reached HK$485.6 billion, a 16.3% increase year-on-year, with a high client retention rate of over 98% [6][22]. - Futu's international expansion efforts have begun to yield results, with its Singapore branch achieving profitability in Q4 2023 and new market entries planned for 2024 [6][22]. Revenue Breakdown - Brokerage commission revenue for FY23 was HK$3,944.8 million, with a slight decline of 1.6% year-on-year, while interest income surged by 72% to HK$5,536.4 million [5][6][22]. - Other operating income reached HK$527.2 million, reflecting a 34% increase year-on-year, driven by higher fund sales [7][22]. Cost Management - Total operating expenses for FY23 were HK$3,464.7 million, a 13.6% increase year-on-year, with a cost-to-income ratio of 35% [8][22]. - Research and development expenses accounted for 14% of total revenue, while sales and management expenses were 7% and 13%, respectively [8][22].