Futu Holdings Ltd (FUTU) Stock Analysis and Metrics

Sector: Financial Services Industry: Capital Markets CIK: 0001754581

Market Cap 22.89 Bn

P/B 4.88

P/E 18.13

P/S 8.54

ROIC (Qtr) 170.35

Div Yield % 1.21

Rev 1y % (Qtr) 86.82

Total Debt (Qtr) 1.75 Bn

Debt/Equity (Qtr) 0.37

About

Futu Holdings Ltd, also known as FUTU, is a prominent player in the financial technology industry, offering a wide range of digitalized securities brokerage and wealth management product distribution services. The company operates through its subsidiaries, including Futu Securities International (Hong Kong) Limited, Futu Network Technology Co., Ltd., and Moomoo Financial Inc. FUTU's business model is anchored in its proprietary technology infrastructure, enabling it to provide a comprehensive array of investment products and services to its users...

Futu Holdings Ltd, also known as FUTU, is a prominent player in the financial technology industry, offering a wide range of digitalized securities brokerage and wealth management product distribution services. The company operates through its subsidiaries, including Futu Securities International (Hong Kong) Limited, Futu Network Technology Co., Ltd., and Moomoo Financial Inc.

FUTU's business model is anchored in its proprietary technology infrastructure, enabling it to provide a comprehensive array of investment products and services to its users and clients. The company's primary platform, Futubull, is accessible to users in Hong Kong and Mainland China, while its international version, moomoo, is available in the United States, Singapore, Australia, Japan, Canada, and Malaysia.

The company's revenue is primarily generated through trading commissions, margin financing, and securities lending. FUTU's primary clients are individual investors, including retail investors and high-net-worth individuals, as well as institutional clients such as fund managers and family offices.

FUTU's competitive advantages include its user-friendly and intuitive platform, a comprehensive range of investment products and services, and a strong brand recognition and reputation in the industry. The company's technology infrastructure is a key competitive advantage, as it enables it to offer fast and reliable trading services to its users and clients.

In the highly competitive online brokerage and financial technology industries, FUTU competes with other companies such as Robinhood, eToro, and Interactive Brokers. However, FUTU's focus on providing a comprehensive range of investment products and services, along with its strong brand recognition and reputation, has enabled it to differentiate itself from its competitors and establish a strong presence in the market.

FUTU's customer base is primarily based in Hong Kong, Mainland China, and other Asian markets. However, the company is expanding its presence in other regions, including the United States, Europe, and Australia.

In addition to its trading execution services, FUTU offers real-time and cross-market securities-backed financing to its clients, and its margin financing and securities lending services have grown rapidly since their introduction. The company also offers online wealth management product distribution services under the Money Plus brand through its Futubull and moomoo platforms, providing clients with access to mutual funds, private funds, bonds, structured products, and other wealth management products.

FUTU's business is subject to various risks and challenges, including regulatory risks, market risks, and operational risks. However, the company's strong brand recognition, proprietary technology infrastructure, and comprehensive range of investment products and services position it well to navigate these challenges and continue to grow in the financial technology industry.

References:
Futu Holdings Ltd. (2023). Annual Report 2023. Retrieved from https://www.futuholdingsltd.com/static/e8e3a87f606d2e96582d11e9a337f0f7.pdf

Price action

Investment thesis

Bull case

Healthy cash reserves of 17.78B provide 10.47x coverage of short-term debt 1.70B, demonstrating strong liquidity position and minimal refinancing risk.
Strong tangible asset base of 31.28B provides 17.86x coverage of total debt 1.75B, indicating robust asset backing and low credit risk.
Short-term investments of 7.93B provide solid 11.88x coverage of other current liabilities 667.59M, indicating strong liquidity.
Cash position of 17.78B provides exceptional 8129.82x coverage of minority interest expenses 2.19M, indicating strong liquidity.
Long-term investments of 88.34M provide solid 1.65x coverage of long-term debt 53.48M, indicating strategic financial planning.

Bear case

Investment activities of 0 provide weak support for R&D spending of 231.57M, which is 0x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
Long-term investments of 88.34M represent a high 1.21x of fixed assets 72.83M, indicating potential overexposure to financial assets versus operational capabilities.
Operating cash flow of 0 provides minimal 0x coverage of tax expenses of 265.08M, suggesting potential tax planning inefficiencies or unsustainable tax positions.
Retained earnings of 2.90B provide limited buffer against comprehensive income items of (2.05M), which is -1418.01x, indicating elevated exposure to market risks.
Short-term investments of 7.93B represent 1.89x of working capital 4.21B, suggesting potentially excessive financial asset allocation versus operational needs.

Peer comparison

Companies in the Capital Markets

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	GS	Goldman Sachs Group Inc	284.23 Bn	17.94	4.84	911.32 Bn
2	MS	Morgan Stanley	279.63 Bn	17.97	4.05	353.12 Bn
3	SCHW	Schwab Charles Corp	179.33 Bn	23.09	7.83	27.59 Bn
4	HOOD	Robinhood Markets, Inc.	106.92 Bn	48.73	25.43	0.00 Bn
5	CRCL	Circle Internet Group, Inc.	40.97 Bn	261.00	24.22	0.15 Bn
6	IBKR	Interactive Brokers Group, Inc.	28.23 Bn	30.79	4.75	28.43 Bn
7	LPLA	LPL Financial Holdings Inc.	27.60 Bn	33.13	1.77	7.52 Bn
8	FUTU	Futu Holdings Ltd	22.89 Bn	18.13	8.54	1.75 Bn

Industry comparisons

Current Valuation	Value	Ind Avg
EV to Assets EV to Assets	0.00	1.07
EV to Cash from Ops. EV/CFO	0.03	15.33
EV to Debt EV to Debt	0.07	21.89
EV to EBIT EV/EBIT	0.08	-0.80
EV to EBITDA EV/EBITDA	0.13	11.20
EV to Free Cash Flow [EV/FCF] EV/FCF	0.03	43.08
EV to Market Cap EV to Market Cap	0.01	-0.05
EV to Revenue EV/Rev	0.04	12.82
Price to Book Value [P/B] P/B	4.88	3.09
Price to Earnings [P/E] P/E	18.13	6.20

Dividend Metrics	Value	Ind Avg
Dividend Coverage Ratio Dividend Coverage Ratio	0.00	4.22
Dividend Payout Ratio % Div Payout % (Qtr)	22.00	10.37
Dividend per Basic Share Div per Share (Qtr)	2.00	0.70
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr)	0.00	-8.68
Interest Coverage Interest Coverage	0.00	37.53

Growth Metrics	Value	Ind Avg
Capex Growth (1y) % Capex 1y % (Qtr)	0.00	-12,429.64
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr)	83.75	1,588.78
Dividend Growth (1y) % Dividend Growth (1y) %	0.00	4.88
EBIAT Growth (1y) % EBIAT 1y % (Qtr)	121.24	270.93
EBITDA Growth (1y) % EBITDA Growth (1y) %	0.00	333.57
EBIT Growth (1y) % EBIT 1y % (Qtr)	128.40	3,103.22
EBT Growth (1y) % EBT 1y % (Qtr)	128.40	3,039.53
EPS Growth (1y) % EPS 1y % (Qtr)	118.59	24.25
FCF Growth (1y) % FCF 1y % (Qtr)	0.00	-80.08
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr)	89.83	51.33

Liquidity Ratios	Value	Ind Avg
Asset Utilization Ratio Asset Util Ratio (Qtr)	0.01	0.42
Cash Payout Ratio Cash Payout Ratio	0.00	-0.08
Cash Ratio Cash Ratio (Qtr)	0.67	2.01
Current Ratio Curr Ratio (Qtr)	1.16	3.47
Debt to Equity Ratio Debt/Equity (Qtr)	0.37	1.46
Interest Cover Ratio Interest Cover Ratio	0.00	37.53
Times Interest Earned Times Interest Earned	0.00	37.53

Profitability	Value	Ind Avg
EBITDA Margin % EBITDA Margin %	0.00	76.68
EBIT Margin % EBIT Margin % (Qtr)	443.53	46.81
EBT Margin % EBT Margin % (Qtr)	57.01	58.57
Gross Margin % Gross Margin % (Qtr)	85.70	53.60
Net Profit Margin % Net Margin % (Qtr)	47.10	29.41

Futu Holdings Ltd (NASDAQ: FUTU)

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