Blue Lotus China New Economy Research, Blue Lotus Research Institute

Eric Wen

Blue Lotus China New Economy Research

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>We think FUTU is stepping into a stagnant phase in 2024. Japan is not a game changer. </li>
<li>Client asset inflow from overseas is not meaningful, and growth from mainland is frozen by regulation.</li>
<li>We downgrade the stock into SELL rating and cut TP to US$46/ADS, mainly due to slow progress in overseas expansion and difficulty in monetization. </li>
</ul>


We think FUTU is stepping into a stagnant phase in 2024. Japan is not a game changer. 
Client asset inflow from overseas is not meaningful, and growth from mainland is frozen by regulation.
We downgrade the stock into SELL rating and cut TP to US$46/ADS, mainly due to slow progress in overseas expansion and difficulty in monetization. 


[Futu Holdings(FUTU US, SELL, TP US$46)Rating Change]: Run Out of Growth Momentum, Downgrade to SELL

Insurance & Central Asia-focused Analyst, KT Capital Group

Alec Tseung

Insurance & Central Asia-focused Analyst

KT Capital Group

Principal investments and advisory firm that focuses on connecting the CIS countries with East Asia.

Principal investments and advisory firm

<ul>
<li>Hindenburg Research published a short-selling report accusing the company and its Chairman &amp; CEO of evading sanctions, fabricating revenue, market manipulations, etc.</li>
<li>One area that could warrant more attention is the acquisitions Freedom carried out over the past 18 months, where numerous target companies were personally invested by its Chairman &amp; CEO.</li>
<li>In Kazakhstan, it's difficult to have full visibility into these target companies’ shareholders and for whom exactly Freedom was providing liquidity.</li>
</ul>


Hindenburg Research published a short-selling report accusing the company and its Chairman &amp; CEO of evading sanctions, fabricating revenue, market manipulations, etc.
One area that could warrant more attention is the acquisitions Freedom carried out over the past 18 months, where numerous target companies were personally invested by its Chairman &amp; CEO.
In Kazakhstan, it's difficult to have full visibility into these target companies’ shareholders and for whom exactly Freedom was providing liquidity.


Freedom Holding: A Kazakh Scam Being Uncovered?

APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/jf-wealth-holdings" target="_blank" data-smartkarma-citation="entities:36805:1" rel="noopener">JF Wealth Holdings (9636 HK)</a> was listed on 10th March 2023, its one-year lockup will expire on 9th Sept 2023.</li>
<li>The firm had raised around US$129m in its Hong Kong IPO, at the bottom end of its indicative price range.</li>
<li>JF Wealth (JFW) is an online investment decision-making solution provider in China, focusing on the online investor content services market.</li>
</ul>



JF Wealth Holdings (9636 HK) was listed on 10th March 2023, its one-year lockup will expire on 9th Sept 2023.
The firm had raised around US$129m in its Hong Kong IPO, at the bottom end of its indicative price range.
JF Wealth (JFW) is an online investment decision-making solution provider in China, focusing on the online investor content services market.


JF Wealth Lock-Up - At Least US$465m to Be Unlocked, Needs Some Selling to Improve Its Liquidity

China/Asia TMT

Shawn Yang

<ul>
<li>FUTU reported 2Q23 revenue 5.9%/13.5% vs. our estimate/consensus, non-GAAP NI beat our estimate/consensus by 9.9%/19.4%, mainly contributed by higher revenue from interest income due to continuous interest rate hike.</li>
<li>Overseas expansion turns to be the primary focus. However, we think exploit new market is a bumpy and slow path, which cannot solve the near-term headwind on weak trading sentiment.</li>
<li>We maintain the stock as BUY rating and maintain TP at US$55/ADS, which implies 12.6x PE in 2023, the stock currently trading at 11.3x PE in 2023, leaving 12% upside.</li>
</ul>


FUTU reported 2Q23 revenue 5.9%/13.5% vs. our estimate/consensus, non-GAAP NI beat our estimate/consensus by 9.9%/19.4%, mainly contributed by higher revenue from interest income due to continuous interest rate hike.
Overseas expansion turns to be the primary focus. However, we think exploit new market is a bumpy and slow path, which cannot solve the near-term headwind on weak trading sentiment.
We maintain the stock as BUY rating and maintain TP at US$55/ADS, which implies 12.6x PE in 2023, the stock currently trading at 11.3x PE in 2023, leaving 12% upside.


[Futu Holdings (FUTU US, BUY, TP US$55) Earnings Review]: Short Term Peaking but Momentum Remains

<ul>
<li>We think Futu has proved its ability to retain its mainland China users. The DAU remained stable, and the growth rate of clients’ HK assets outpaced the market in July.</li>
<li>Futu’s overseas expansion is quickly ramping up in Japan, Malaysia, and is progress steadily in Singapore and Australia. We expect the monetization in Malaysia begin in 2024.</li>
<li>We expect Futu 2Q23 revenue 4.5% higher than consensus, our non-GAAP NI 8.7% higher than consensus. We maintain BUY rating on FUTU and raise TP by US$4 to US$55.</li>
</ul>


We think Futu has proved its ability to retain its mainland China users. The DAU remained stable, and the growth rate of clients’ HK assets outpaced the market in July.
Futu’s overseas expansion is quickly ramping up in Japan, Malaysia, and is progress steadily in Singapore and Australia. We expect the monetization in Malaysia begin in 2024.
We expect Futu 2Q23 revenue 4.5% higher than consensus, our non-GAAP NI 8.7% higher than consensus. We maintain BUY rating on FUTU and raise TP by US$4 to US$55.


[Futu Holdings (FUTU US, BUY, TP US$55) TP Change]: Better Outlook in Both Domestic and Overseas

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 Holdings(FUTU US, SELL, TP US$46)Rating Change]: Run Out of Growth Momentum, Downgrade to SELL

FUTU faces stagnation in 2024 as Japan offers limited growth potential and regulatory constraints hinder expansion. Stock downgraded to SELL /ADS...

Blue Lotus Research Institute

Freedom Holding: A Kazakh Scam Being Uncovered?

Freedom Holding has been acquiring companies that were personally invested by its Chairman & CEO. This is another area that should warrant more...

Alec Tseung

JF Wealth Lock-Up - At Least US$465m to Be Unlocked, Needs Some Selling to Improve Its Liquidity

JF Wealth Holdings (9636 HK) was listed on 10th March 2023, its one-year lockup will expire on 9th Sept 2023. The firm had raised around US$129m in...

Clarence Chu

[Futu Holdings (FUTU US, BUY, TP US$55) Earnings Review]: Short Term Peaking but Momentum Remains

We maintain the stock as BUY rating and maintain TP at US$55/ADS, which implies 12.6x PE in 2023, the stock currently trading at 11.3x PE in 2023,...

Blue Lotus Research Institute

[Futu Holdings (FUTU US, BUY, TP US$55) TP Change]: Better Outlook in Both Domestic and Overseas

We expect Futu 2Q23 revenue 4.5% higher than consensus, our non-GAAP NI 8.7% higher than consensus. We maintain BUY rating on FUTU and raise TP by...

Blue Lotus Research Institute

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

[Futu Holdings(FUTU US, SELL, TP US$46)Rating Change]: Run Out of Growth Momentum, Downgrade to SELL

​FUTU faces stagnation in 2024 as Japan offers limited growth potential and regulatory constraints hinder expansion. Stock downgraded to SELL /ADS...

Blue Lotus Research Institute

Freedom Holding: A Kazakh Scam Being Uncovered?

Freedom Holding has been acquiring companies that were personally invested by its Chairman & CEO. This is another area that should warrant more...

Alec Tseung

JF Wealth Lock-Up - At Least US$465m to Be Unlocked, Needs Some Selling to Improve Its Liquidity

JF Wealth Holdings (9636 HK) was listed on 10th March 2023, its one-year lockup will expire on 9th Sept 2023. The firm had raised around US$129m in...

Clarence Chu

[Futu Holdings (FUTU US, BUY, TP US$55) Earnings Review]: Short Term Peaking but Momentum Remains

We maintain the stock as BUY rating and maintain TP at US$55/ADS, which implies 12.6x PE in 2023, the stock currently trading at 11.3x PE in 2023,...

Blue Lotus Research Institute

[Futu Holdings (FUTU US, BUY, TP US$55) TP Change]: Better Outlook in Both Domestic and Overseas

We expect Futu 2Q23 revenue 4.5% higher than consensus, our non-GAAP NI 8.7% higher than consensus. We maintain BUY rating on FUTU and raise TP by...

Blue Lotus Research Institute

FUTU faces stagnation in 2024 as Japan offers limited growth potential and regulatory constraints hinder expansion. Stock downgraded to SELL /ADS...