Bank of Communications International: Cut Futu Holdings' target price by 7% to US$50

$Futu Holdings Ltd(FUTU.US)$ According to a research report issued by Bank of Communications International, the growth rate of Futu's operating income and net profit in the first three quarters of 2021 was slower than the high base in the first half of the year. The revenue/net profit in the third quarter exceeded market expectations, mainly due to the increase in trading volume and the increase in the comprehensive commission rate. The gross profit margin has been on the rise since 2021, and it was 84.6% in the third quarter. The wealth management business developed rapidly. At the end of the third quarter, the scale of wealth management customers/assets increased by 174%/74% respectively from the beginning of the year. In the third quarter, 166,000 new customers with assets were added. At the end of the third quarter, customer assets fell 16% month-on-month; customer assets fell 28% month-on-month. Bank of Communications believes that Futu's future growth will mainly come from wealth management transformation and geographic expansion, but regulatory uncertainty may affect growth prospects. It is estimated that the compound annual growth rate of profit in 21-23 will be 33%. Based on 13.3 times the 22-year price-to-earnings ratio, Bank of Communications lowered its target price from US$53.3 to US$50, maintaining a neutral rating.

Article excerpted from the US Stock Research Agency