Equity Research Analyst - Long-Short

Raj S, CA, CFA

Equity Bottom-Up

<ul>
<li>FUTU’s platform is already scaled and profitable, with strong client growth, sticky assets, and expanding yields from cash and margin balances.</li>
<li>Crypto optionality is real but not fully in consensus. The full license could transform revenue mix in 2026-27 significantly, with margin upside.</li>
<li>At 20x FY2 P/E, even though its peak of its range, we think the valuation doesn’t reflect the potential impact on revenues from crypto. We believe consensus is 10-15% short.</li>
</ul>


FUTU’s platform is already scaled and profitable, with strong client growth, sticky assets, and expanding yields from cash and margin balances.
Crypto optionality is real but not fully in consensus. The full license could transform revenue mix in 2026-27 significantly, with margin upside.
At 20x FY2 P/E, even though its peak of its range, we think the valuation doesn’t reflect the potential impact on revenues from crypto. We believe consensus is 10-15% short.


FUTU: Strong Traction Expected from Crypto Regulatory Push in HK and ASEAN

<ul>
<li>FUTU's risk-reward is asymmetric:  Structurally low valuation, active consensus upgrades and a near-term catalyst (HK crypto VATP license), which can boost further upgrades (2026e) sets up a compelling long entry.</li>
<li>HK-VATP enables FUTU to expand its crypto related revenues, product offerings and margins, and remove third-party dependency. With crypto &lt;2% assets, this new earnings leg is entirely absent from consensus.</li>
<li>FUTU’s pullback to ~15.6x FY2 P/E puts it at the bottom of a ~15x-25x - reasonable valuation band. With upgrades and catalysts ahead, it stands as a strong rerating candidate.</li>
</ul>


FUTU's risk-reward is asymmetric:  Structurally low valuation, active consensus upgrades and a near-term catalyst (HK crypto VATP license), which can boost further upgrades (2026e) sets up a compelling long entry.
HK-VATP enables FUTU to expand its crypto related revenues, product offerings and margins, and remove third-party dependency. With crypto &lt;2% assets, this new earnings leg is entirely absent from consensus.
FUTU’s pullback to ~15.6x FY2 P/E puts it at the bottom of a ~15x-25x - reasonable valuation band. With upgrades and catalysts ahead, it stands as a strong rerating candidate.


2026 High Conviction Idea - FUTU US - 3Q25 Beat and Bottom-Of-Range Valuation Creates Strong Upside

Smartkarma AI, Smartkarma

αSK

Smartkarma AI

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

<ul>
 <li>Futu Holdings is a high-growth, technology-driven online brokerage and wealth management platform with a strong foothold in Hong Kong and expanding international operations.</li>
 <li>The company has demonstrated exceptional financial performance, characterized by robust revenue and net income growth, and superior profit margins compared to industry peers, driven by a scalable business model.</li>
 <li>Significant regulatory risks, particularly concerning its mainland China client base and the evolving cross-border financial services landscape, remain a key uncertainty and a primary concern for investors.</li>
</ul>This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.


  Futu Holdings is a high-growth, technology-driven online brokerage and wealth management platform with a strong foothold in Hong Kong and expanding international operations.
  The company has demonstrated exceptional financial performance, characterized by robust revenue and net income growth, and superior profit margins compared to industry peers, driven by a scalable business model.
  Significant regulatory risks, particularly concerning its mainland China client base and the evolving cross-border financial services landscape, remain a key uncertainty and a primary concern for investors.
This content is AI-generated and displayed for general informational purposes only. Please verify independently before use.

Primer: Futu Holdings Ltd (FUTU US) - Dec 2025

External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

<ul><li>Futu posted a strong set of 3Q results with non-GAAP net income surging 137%/25% YoY/QoQ to HK$3.3bn on top of a high base, significantly beating market consensus of HK$2.6-2.7bn.</li><li>3Q25 gross profit doubled YoY to HK$5.6bn, leading to the highest GPM of 87.6% since 2Q23. The strong topline growth was driven by 1) sequentially increased trading volumes to HK$3.9tn that supported brokerage commission income growth of 90.6% YoY in 3Q25; 2) a rebound in net interest income amid the HIBOR recovery in 3Q25 and sustained strong demands for hard-to-borrow securities’ lending business; and 3) other income (+113% YoY) including higher fund distribution, IPO subscription service charge and FX income.</li><li>Total client assets grew 78.8%/27.4% YoY/QoQ to HK$1.24tn driven by robust net asset inflows (~HK$89bn) and significant MTM appreciation on clients’ asset holdings (CMBI est: HK$177bn). </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Futu posted a strong set of 3Q results with non-GAAP net income surging 137%/25% YoY/QoQ to HK$3.3bn on top of a high base, significantly beating market consensus of HK$2.6-2.7bn.3Q25 gross profit doubled YoY to HK$5.6bn, leading to the highest GPM of 87.6% since 2Q23. The strong topline growth was driven by 1) sequentially increased trading volumes to HK$3.9tn that supported brokerage commission income growth of 90.6% YoY in 3Q25; 2) a rebound in net interest income amid the HIBOR recovery in 3Q25 and sustained strong demands for hard-to-borrow securities’ lending business; and 3) other income (+113% YoY) including higher fund distribution, IPO subscription service charge and FX income.Total client assets grew 78.8%/27.4% YoY/QoQ to HK$1.24tn driven by robust net asset inflows (~HK$89bn) and significant MTM appreciation on clients’ asset holdings (CMBI est: HK$177bn). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Futu Holdings (FUTU US) - 3Q Earnings a Strong Beat...

<ul><li>We completed a four-day marketing trip in HK last week engaging with active longonly and long/short investors covering China/HK markets.</li><li>We see that L/O investors’ long-term conviction in Futu has strengthened, although short-term views are mixed. Key concerns include 1) tightening of account opening process to mainland clients in HK; 2) fund outflows amid easing sentiment towards stablecoin-related themes; and 3) possible client and asset attritions on the Futubull platform due to CRS global taxation plan.</li><li>We believe these headwinds are largely sentiment-driven and do not reflect the broker’s solid fundamentals. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We completed a four-day marketing trip in HK last week engaging with active longonly and long/short investors covering China/HK markets.We see that L/O investors’ long-term conviction in Futu has strengthened, although short-term views are mixed. Key concerns include 1) tightening of account opening process to mainland clients in HK; 2) fund outflows amid easing sentiment towards stablecoin-related themes; and 3) possible client and asset attritions on the Futubull platform due to CRS global taxation plan.We believe these headwinds are largely sentiment-driven and do not reflect the broker’s solid fundamentals. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Futu Holdings (FUTU US) - Marketing Feedback: Short-Term Views Mixed...

United States

Futu Holdings Limited operates as a holding company. The Company, through its subsidiaries, offers an online brokerage platform that enables individual investors to trade in listed stocks. Futu Holdings serves customers in the United States, China, and Hong Kong.

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Futu Holdings Ltd (FUTU US)

FUTU: Strong Traction Expected from Crypto Regulatory Push in HK and ASEAN

We re-iterated our bullish position on FUTU in a new note. FUTU's risk-reward is asymmetric: The combination of a structurally low valuation,...

Raj S, CA, CFA

2026 High Conviction Idea - FUTU US - 3Q25 Beat and Bottom-Of-Range Valuation Creates Strong Upside

2026 High Conviction: FUTU US risk-reward is asymmetric: Structurally low valuation, consensus upgrades post 3Q25 and a near-term catalyst (crypto...

Raj S, CA, CFA

Primer: Futu Holdings Ltd (FUTU US) - Dec 2025

Futu Holdings is a high-growth, technology-driven online brokerage and wealth management platform with a strong foothold in Hong Kong and...

αSK

Futu Holdings (FUTU US) - 3Q Earnings a Strong Beat...

Futu posted a strong set of 3Q results with non-GAAP net income surging 137%/25% YoY/QoQ to HK$3.3bn on top of a high base, significantly beating...

CMB International

Futu Holdings (FUTU US) - Marketing Feedback: Short-Term Views Mixed...

We completed a four-day marketing trip in HK last week engaging with active longonly and long/short investors covering China/HK markets.

CMB International

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