Equity Research Analyst - Long-Short

Raj S, CA, CFA

Equity Bottom-Up

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.

<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

Meitu, Inc. offers mobile application software. The Company researches, produces, and markets image editing, live broadcasting, and other related social software. Meitu Inc also participate in mobile designing and retailing around the world.

<ul>
<li>Meitu’s business model is not threatened by new AI image generation models. Long-term positioning remains intact. Last-mile workflows, a seventeen-year aesthetic dataset, and stable founder-led execution sustainable clear Moats.</li>
<li>Overseas markets offer materially higher pay-ratios and ARPU. Productivity and e-commerce tools drive the mix shift toward high-margin growth. Both support multi-year revenue compounding independent of AI capex cycles.</li>
<li>Recent Correction due to AI substitution fears drove the multiple to ~27x, placing PEG below 1x on 30% CAGR. Long-term buy with 100% upside and potential for strong re-rating.</li>
</ul>


Meitu’s business model is not threatened by new AI image generation models. Long-term positioning remains intact. Last-mile workflows, a seventeen-year aesthetic dataset, and stable founder-led execution sustainable clear Moats.
Overseas markets offer materially higher pay-ratios and ARPU. Productivity and e-commerce tools drive the mix shift toward high-margin growth. Both support multi-year revenue compounding independent of AI capex cycles.
Recent Correction due to AI substitution fears drove the multiple to ~27x, placing PEG below 1x on 30% CAGR. Long-term buy with 100% upside and potential for strong re-rating.


Meitu Inc (1357 HK): AI a Threat? Not Really - Long-Term Compounder Driven by Dual Growth Engines

Beijing Roborock Technology  / Equity Bottom-Up

Beijing Roborock Technology Co., Ltd. manufactures and sells household vacuum cleaners. The Company researches, develops, and produces robotic home cleaners and other cleaning appliances. Beijing Roborock Technology also manufactures and sells household appliance parts.

<ul>
<li>Roborock's margins are expected to bottom-out after a tough four quarters of strategically prioritizing market share at the cost of margins. 3Q-4Q25 will mark the start of new margin cycle.</li>
<li>Margins stabilizing at the new normal of 12-14% NPM will mean earnings will track revenue growth going forward. Meanwhile, revenues can surprise on the upside with &gt;25% CAGR in medium-term.</li>
<li>
HK-Listing into 2H25/ 1H26 is a strong catalyst which can bring in fresh money, and improve disclosure standards - a key concern. We expect 70% upside in our bull case.
</li>
</ul>


Roborock's margins are expected to bottom-out after a tough four quarters of strategically prioritizing market share at the cost of margins. 3Q-4Q25 will mark the start of new margin cycle.
Margins stabilizing at the new normal of 12-14% NPM will mean earnings will track revenue growth going forward. Meanwhile, revenues can surprise on the upside with &gt;25% CAGR in medium-term.

HK-Listing into 2H25/ 1H26 is a strong catalyst which can bring in fresh money, and improve disclosure standards - a key concern. We expect 70% upside in our bull case.



Beijing Roborock (688169.SS): Structural Margin Recovery to Drive Re-Rating; HK Listing Key Catalyst

<ul>
<li>
Margins yet to recover – 3Q25 profitability remained under pressure from China promotions and early Vietnam cost drag.</li>
<li>Strong topline – revenue +61 % YoY, driven by broad-based global demand.</li>
<li>Recovery deferred – margin inflection likely only after efficiency gains and tariff easing.</li>
</ul>



Margins yet to recover – 3Q25 profitability remained under pressure from China promotions and early Vietnam cost drag.
Strong topline – revenue +61 % YoY, driven by broad-based global demand.
Recovery deferred – margin inflection likely only after efficiency gains and tariff easing.


Beijing Roborock (688169.SS): 3Q25 Review: Turn Around Delayed Further

I am Raj - CA and CFA. A Buy-side analyst.

I cover BFSI, Autos, Tech, AI and several other sectors across geographies.
   
I am a CA and CFA, with 10+ years experience in fundamental equity research across buy-side and sell-side and across geographies.

My research process is primarily focused on the catalysts which would have a direct impact on a stocks fundamental performance and market valuation. These days, I look for names which have a clear mis-pricing evident in its valuation vs. fundamental business moats/ growth/ NAV. Fortunately, there are always such stories around. More importantly, the timeline of when the mis-pricing is resolved and what triggers this resolution is what interests me.