3Q24_ Overseas Growth on Track; Special Dividend a Positive Surprise

Summary of Futu Holdings Ltd 3Q24 Earnings Call Company Overview - Company: Futu Holdings Ltd (FUTU.O, FUTU US) - Industry: Financial Services, specifically online brokerage - Market Capitalization: HK$100,573 million - Stock Rating: Overweight - Price Target: US$115.00, representing a 25% upside from the current price of US$92.30 Key Financial Highlights - Client Assets: Increased by 48% year-over-year to HK$693 billion, exceeding consensus estimates by approximately 7% [2][10] - Revenue: Reported at HK$3,436 million, a 29.6% increase year-over-year and a 9.8% increase quarter-over-quarter [10] - Net Brokerage Commissions: Increased to HK$1,318 million, up 53.2% year-over-year [10] - Net Interest Income: HK$1,285 million, a 5.7% increase year-over-year [10] - Profit: Non-GAAP net profit of HK$1,319 million, reflecting a 20.9% year-over-year increase [10] Client Growth and Market Performance - Client Acquisition: Total paying clients reached 2,196,647, a 33.1% increase year-over-year [10] - Client Inflows: Overseas inflows surpassed HK$10 billion for three consecutive quarters, contributing to approximately 25-30% of total inflows [7] - Trading Volume: Total trading volume increased by 75% year-over-year to HK$1,904,102 million [10] Special Dividend Announcement - Dividend: A special dividend of US$280 million was announced, representing over 40% of the estimated profit for 2024 and 7.8% of the equity base [4] - Management Confidence: The dividend reflects management's confidence in the company's balance sheet and growth potential, indicating that it will not hinder expansion plans [4] Operational Insights - Trading Velocity: Increased to 12x total assets from 11.8x in the previous quarter, primarily driven by US stocks [2] - Client Acquisition Cost: Decreased by 7% quarter-over-quarter to HK$2,037, expected to remain below the guided HK$2,500 for the full year [3] - Market Share: Notable increase in trading volume market share, particularly in US stocks, which rose to 1.03% [10] Regional Performance - Client Growth by Region: Hong Kong and Singapore contributed over one-third of new clients, with Singapore seeing an 18% increase in total client assets [5] - Crypto Trading: Daily trading volume for cryptocurrencies has ramped up to US$10-20 million since launch, with expectations for continued growth [7] Risks and Assumptions - Upside Risks: Better-than-expected market conditions in Hong Kong and the US, and solid traction in Japanese user acquisition [13] - Downside Risks: Major corrections in US/HK markets and increased regulation of the onshore client base [13] Conclusion Futu Holdings Ltd demonstrated strong financial performance in 3Q24, with significant growth in client assets and revenue, alongside a positive outlook for overseas expansion and a shareholder-friendly special dividend. The company remains well-positioned in the online brokerage space, with ongoing efforts to enhance its market presence and client acquisition strategies.