On November 24th, Jefferies released a research report stating that it maintains a "buy" rating on Futu and raised the target price from $64.8 to $71.5.

Jefferies pointed out the following highlights on FUTU:

1. Futu reported 3Q23 results with revenue ahead of market expectations. Non-GAAP net profit increased 43.7% YoY to HK$1,158m, 2.1% below market expectations while 17.3% above Jefferies' estimate. Non-GAAP net margin improved by 2.3pp YoY to 43.7%.

2. In 3Q23, Futu added nearly 65K new paying clients (58K in 2Q23), with total paying clients reaching about 1.65 million. In 9M23, Futu acquired more than 163K paying clients, exceeding its full-year guidance of 150K.

3. Key takeaways from the conference call. 1)In Hong Kong, Futu acquired clients through targeted marketing campaigns around the government’s green bond and silver bond offerings. 2) In Singapore, paying client growth remained resilient as money market funds continued to gain traction amid the high rate environment.

4. Jefferies views Futu’s proprietary technology infrastructure as its key strength over peers, which should help save costs and improve operating efficiency. Jefferies sees Futu as ahead of other potential competitors by around 2-3 years in terms of financial licenses obtained, technology, and community etc..

Jefferies maintains Buy and raises FUTU's PT to US$71.5 (prior US$64.8), based on 2024E EPS of HK$33.8 and 16.5x P/E post better-than-expected results and sizable potential in overseas markets.

Risks:

• macro-headwinds impacting securities market trading volume in the US, HK and SG;

• loss of market share due to competition;

• lower-than-expected commission fee rate and interest rate;