Futu Analyst Call: Embracing Regulation, 800K New Customer Target Unchanged

In response to the new cross-border regulatory policies, Futu CEO Li Hua stated at the performance meeting on May 28th that the rule adjustment is a unified requirement for the entire industry, and the company has fully stopped opening accounts for mainland customers, rejecting tens of thousands of non-compliant applications over the past two years. He emphasized that the two-year rectification period does not require the liquidation of accounts, but rather restricts the domestic customers' fund inflow and purchase behavior within the territory, and is expected to have no substantial impact on the full-year guidance of 800,000 customer acquisitions.

On the financial front, the total revenue for the first quarter was 5.9 billion Hong Kong dollars, a year-on-year increase of 25%. Affected by a fine of 1.85 billion yuan, the net profit fell by 61% year-on-year to 831 million Hong Kong dollars; excluding this one-time item, the net profit increased by 36% year-on-year. The total transaction volume reached 4.15 trillion Hong Kong dollars, a year-on-year increase of 29%, setting a new record for the platform.

In terms of regional structure, the revenue contribution from mainland business has dropped to about 20%. Malaysia and Hong Kong together contributed more than half of the net new customers, and the overseas brand Moomoo's customer proportion has exceeded 55%, with revenue growth in five countries exceeding 100%. CFO Chen Yu said that they have been in close communication with credit rating agencies and global commercial banks this week, and the bank's credit limits have remained stable, expressing full confidence in the upcoming annual rating update.

In terms of the South Korean stock market layout, Futu Niuniu and Moomoo have launched real-time market quotations for South Korean stocks in April, with the trading function expected to be opened first in Hong Kong and Singapore in the middle of June. As of May 26, the proportions of Futu customers holding twice the long positions in Samsung Electronics and Hynix ETFs were 30% and 18% respectively, and the management stated that this reflects the strong demand from customers for core targets in the AI industry chain.

In the field of virtual assets, the Cheetah exchange has officially passed the second phase of the Hong Kong SFC VATP license approval in March and fully commenced its business. The management revealed that the next step will be to promote securities financing, OTC trading, and pledge functions supported by virtual assets, and to explore secondary market trading of tokenized securities, aiming to build the Cheetah exchange into an important infrastructure of the Hong Kong Web3 ecosystem. In the United States, Moomoo has been approved by the NFA to conduct predictive market brokerage and clearing business, with the product system ready, expected to be open to retail investors in the near future.

Looking forward to the second quarter, the management expects the net increase in asset customers to remain stable sequentially, with the net inflow of funds continuing the strong growth momentum of the first quarter. Although there were short-term disturbances due to regulatory dynamics last week, they were overall controllable. Benefiting from market performance and active customer trading, AUM and transaction volume are expected to achieve double-digit sequential growth.