On March 14, JPM released a research report and reiterated Futu an Outweight rating with a $64 price target.
JPM pointed out the following highlights:
Futu expects to increase new paying clients by 59% in 2024: Futu provided new guidance on 2024 new paying clients of 350k, up 59% from 220k in 2023.
Overseas expansion is bearing fruit. Futu launched a brokerage business in Malaysia in February 2024. Also, management disclosed that client acquisition in Japan accelerated in Q1 on the back of strong market performance.
Share purchase program: Futu announced a SBB program of US$500mn, ~5.5% of the market cap as of the March 13 closing price. Futu will repurchase up to $500mn worth of shares in 2024 and 2025. This would reduce share count and be ROE accretive.
Downside risk:
1) Earnings missed: revenue was lower than consensus and JPMe by 5% and 19%, respectively, and net profit missed consensus and JPM by 16%/32%. Revenue missed in several lines
2) Cost surprised to the upside, with the CIR at 56.9% in 4Q23 vs 50.9% 4Q22.
2) External environment: Weaker than expected transaction volume.