Summary of Futu Holdings Conference Call Company Overview - **Company**: Futu Holdings - **Industry**: Banks & Financial Services Key Points and Arguments Financial Performance - **Strong 3Q25 Results**: Futu reported a 33% quarter-over-quarter increase in net interest income (NII), surpassing expectations by 19% [7] - **Earnings Growth**: Adjusted EPS estimates for 2025, 2026, and 2027 were raised by 6%, 8%, and 7% respectively, reflecting strong asset under management (AUM) growth and better-than-expected interest income trends [15][28] - **Client Growth**: The number of paying clients increased by 9% quarter-over-quarter, reaching 3.13 million, with 254,300 new paying clients added in 3Q25 [20][25] Market Position and Client Base - **Diversified Client Mix**: Management indicated that only 46% of total funded accounts are from HK/China clients, with Mainland Chinese clients representing less than 20% of paying clients [7] - **AUM Growth**: Total client assets grew by 27% quarter-over-quarter to HK$1.24 trillion, driven by mark-to-market gains and robust net asset inflows [20][25] Interest Rate Sensitivity - **Reduced Vulnerability**: The contribution of idle cash to NII decreased from 43% in FY24 to one-third in 3Q25, reducing overall sensitivity to Fed rate cuts [7] - **Impact of Rate Cuts**: A 25 basis point Fed rate cut would lead to a HK$7 million decline in monthly pre-tax profit, down from HK$8-10 million previously guided [7] Crypto Business - **Significant Growth**: Crypto trading volume surged by 161% quarter-over-quarter, with Ethereum becoming the most traded coin [20] - **Long-term Outlook**: Management remains optimistic about the long-term potential of the crypto business, which is still in early stages of penetration [7][20] Operational Insights - **Increased Operating Expenses**: Operating expenses grew by 32% quarter-over-quarter, attributed to higher selling and marketing expenses and investments in crypto and AI capabilities [20] - **Client Acquisition Cost**: The cost of acquiring new clients was HK$2,300 in 3Q, lower than previous guidance of HK$2,500-3,000 [21] Share Buyback Program - **New Repurchase Plan**: Futu's board authorized a new share repurchase program of up to US$800 million, to be funded from existing cash [20] Valuation and Price Target - **Price Target Raised**: The price target for December 2026 was increased to US$300, based on a 26x earnings multiple applied to 2026E earnings [11][33] - **Valuation Drivers**: Factors expected to drive multiple expansion include a more stable regulatory environment and growth in the crypto and digital assets business [11][33] Additional Important Insights - **Market Performance**: Despite strong results, the stock reaction was muted due to broader market concerns, particularly in the US and crypto sectors [1] - **Future Growth Potential**: Futu is expected to continue expanding its client base and market presence, particularly in new markets like Japan and Malaysia [10][32] Risks - **Downside Risks**: Include weakness in China tech stocks, regulatory risks, and declining HIBOR affecting interest income [34] - **Upside Risks**: Include higher-than-expected growth in paying clients and trading volume [34]

Summary of Futu Holdings 3Q25 Preview Company Overview - **Company**: Futu Holdings - **Industry**: Banks & Financial Services Key Financial Highlights - **3Q25 Expectations**: - Client AUM growth of **13% q/q** to **HK$1.1 trillion** [7][18] - Profit growth of **116% y/y** and **11% q/q** [7][16] - New paying clients expected to increase from **204k in 2Q** to **227k in 3Q** [7][17] - Brokerage revenues projected to rise by **10% q/q** and **85% y/y** [7][18] - Interest income anticipated to grow by **12% q/q** and **51% y/y** [7][18] Market Conditions - **Equity Market Performance**: - Strong performance in HK and US equities, with the Hang Seng Index and Nasdaq Index up **12%** and **11% q/q**, respectively [7][21] - Robust trading volumes in HK and US markets, with HK trading volume up **149% y/y** [22][23] Earnings Estimates - **Revised Earnings Estimates**: - Adjusted EPS for 2025 increased by **12%**, for 2026 by **10%**, and for 2027 by **6%** [7][39] - New price target set at **US$280**, implying a **54% potential upside** from the current price of **US$182.04** [3][11] Strategic Focus - **Key Areas of Interest**: - Management's guidance on 4Q25 operating trends, including client growth and trading velocity [7][17] - Updates on Futu's virtual asset trading platform (VATP) and crypto trading business [7][17] - Clarification on the treatment of new and existing mainland clients following the suspension of new account openings [7][17] Valuation Insights - **Valuation Metrics**: - Current share price at **17x 2026 P/E**, compared to an average forward P/E of **15x** since 4Q21 [7][11] - Anticipated multiple expansion due to a more stable regulatory environment and growth in the crypto and digital assets business [11][44] Risks and Considerations - **Potential Risks**: - Operating expenses expected to rise by **15% q/q** and **38% y/y**, primarily driven by selling and marketing expenses [7][18] - Ongoing regulatory changes and market volatility could impact future performance [11][44] Conclusion - **Investment Thesis**: Futu is positioned for strong growth driven by client acquisition, market expansion, and a robust crypto business. The company maintains an **Overweight** rating with a target price of **US$280** [10][43].