Asia Pacific Equity Research 19 November 2025 Futu Holdings Strong results, reduced vulnerability to regulatory risk and declining interest rate sensitivity – a buying opportunity J P M O R G A N Futu delivered strong 3Q25 results; please see our first take note (link) for details. Nonetheless, the stock reaction on Nov 18th was muted (Futu -0.5%, vs. KWEB -0.2% and Nasdaq -1.2%). We believe this weakness was due mainly to concerns over US market performance and the correction in crypto assets. We view this ...

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].