On May 25th, CICC maintains Outperform rating on Futu and maintains target price of $74.
CICC points out the following highlights:
Futu's total revenue in 1Q23 increased by 52% YoY and 10% QoQ to HKD$2.5 billion, exceeding CICC's expectations by 8%;
Non-GAAP adjusted net income increased by 104% YoY and 25% QoQ to HKD$1.27 billion, exceeding CICC's expectations by 15%, mainly due to the growth of new paying clients, margin financing and securities lending balance;
The number of new paying clients in 1Q increased by 41,000 to 1.528 million, and the total client assets increased by 11% QoQ to HKD$465.5 billion;
Brokerage commission and handling charge income increased by 12% YoY and 3% QoQ to HKD$1.08 billion with blended commission rate of 8.8bps;
The impact of clarified regulatory policies and related uncertainties has been fully priced in, which further solidifies the safety of the valuation.
Considering the growth of interest income and continuous optimization of operational efficiency, CICC raised earnings forecast for 23/24 by 10%/6% to HKD$4.3/4.9 billion. It maintains the target price of $74, which corresponds to a 19x 23e P/E, and maintains outperform rating.
Risks
Regulatory policy uncertainty; market volatility risk; competition exceeds expectations; international expansion not as expected.