20260529-招银国际-1Q26_earnings_missed_TP_cut_to_US_145_on_earnings_revision_for_exit_of_mainland_accounts_8页_1mb

Futu Holdings (FUTU US) Company Update Summary

Core Content

This document provides an update on Futu Holdings (FUTU US) for the first quarter of 2026, including financial performance, key metrics, and the adjustment of target price (TP) due to the exit of mainland accounts and regulatory penalties. It also outlines the company's FY26-28E earnings revisions, valuation analysis, and key risks.

Key Financial Performance

• 1Q26 Earnings:
  • Total revenue fell to HK$5.86bn, down 9% QoQ and 4% below estimates.
  • Non-GAAP net profit dropped to HK$0.92bn, a 73% decline QoQ.
  • Net profit was significantly impacted by a one-off penalty of RMB1.85bn and lower-than-expected operating income.
• Earnings Miss: The earnings missed expectations, prompting a revision of the target price to US$145 from US$228.
• Client Assets:
  • Client assets declined modestly to HK$1.22tn, down 1.1% QoQ, due to mark-to-market losses on US and HK equity holdings.
  • Mainland accounts contributed 17% of total AUM and ~20% of revenue, but are expected to exit over the next two years.
• Trading Volume:
  • Total trading volume increased to HK$4.15tn, up 4.4% QoQ.
  • HK stock turnover rose by 23% QoQ, while US stock turnover fell by 21.1% QoQ.
  • Trading velocity reached 15.8x, up from 15.0x in the previous quarter.
• Blended Commission Rate:
  • The blended commission rate dropped to 6.4bps, below expectations, due to strong cash equity trading and higher-priced US stocks and options.

New Funded Accounts and Client Acquisition

• Total Funded Accounts: Reached 3.59mn, up 6.7% QoQ, with 225k new paying clients added.
• New Clients Target: The company is on track to achieve its annual new client acquisition target of 800k.
• Client Acquisition Costs (CAC): Increased to HK$2.48k, with higher costs expected as the company accelerates overseas expansion.

Earnings Revisions

• FY26-28E Earnings Revisions:
  • Average earnings revision of 27% downward.
  • Revised FY26E EPS to HK$64.6, FY27E to HK$78.9, and FY28E to HK$93.2.
• Valuation Metrics:
  • Current P/E is 13x FY26E, while the new TP implies 18x FY26E.
  • The company's P/E is currently discounted compared to peers, with a 38% discount to the median of key global peers.

Product and Market Developments

• Product Pipeline:
  • Moomoo US will soon launch a prediction market for US retail investors.
  • Panthertrade will expand its Web3 and crypto-native initiatives with the VATP license.
  • Korean stock trading function is set to launch in mid-Jun in HK and SG markets.
• Market Share:
  • Futu's market share in the HK stock market remained stable at 3.04%.
  • Market share in the US stock market increased to 0.41%.
• Overseas Expansion:
  • New market entry progress is on track, with a launch announcement expected in 3Q26E.

Key Risks

• Downside Risks:
  • Lower-than-expected turnover due to easing sentiment.
  • Softening trends in client asset inflows across key markets.
  • Sharp interest rate shocks.
  • Significant drawdowns in US/HK stock and crypto markets.
  • Slower-than-expected market entry.
  • Tightened regulatory oversight.

Peer Comparison

• P/E Comparison (FY26E-28E):
  • Futu's P/E is 12.8x for FY26E, 10.5x for FY27E, and 8.9x for FY28E.
  • Peers include Robinhood (HOOD US), Interactive Brokers (IBKR US), Charles Schwab (SCHW US), and East Money (300059 CH).
  • Futu's P/E is significantly lower than the median of its peers.

Financial Summary

• Income Statement:
  • Revenue for FY26E is expected at HK$22.7bn, down 10% from previous estimates.
  • Non-GAAP net profit for FY26E is HK$9.2bn, down 27%.
• Balance Sheet:
  • Total assets for FY26E are expected to reach HK$242.3bn.
  • Total liabilities are projected at HK$192.7bn.
• Cash Flow:
  • Net change in cash for FY26E is HK$3.75bn.
  • Cash at the end of the year is expected to be HK$127.6bn.

Conclusion

• Rating: Maintain BUY.
• Target Price: US$145.00.
• Valuation: The new TP is derived from a probability-weighted approach of DCF and target P/E.
• Outlook: The company expects to see a re-rating as the onshore regulatory overhang is removed, narrowing the discount in P/E compared to peers.