Market rally and IPO boom in key markets fueling Futu Holdings’ growth

Futu Holdings has started 2025 on a strong footing, posting a robust rise in key metrics performance. In its latest quarterly results, the company reported an impressive increase in the number of funded accounts, users and client assets, highlighting the strong brand equity it enjoys in its operating markets.

Futu Holdings Limited was founded in 2012 and is headquartered in Hong Kong. It is a tech-driven online brokerage and wealth management platform. The group’s proprietary digital platforms - Futubull and Moomoo, offer a full range of investment services, including trade execution and clearing, margin financing and securities lending, and wealth management.

In addition, the company provides corporate services, including IPO distribution, investor relations and ESOP solution services.

Rise in key metrics driving fundamentals

The company delivered decent performance in the quarter, with the total number of funded accounts jumping 41.6% y/y to 2,673,119 as of March 31, 2025. Total number of brokerage accounts rose 30% to o 4,955,319, whereas total number of users increased 16.8% to 26.3m. Client assets, therefore, increased 60.2% to HKD829.8bn. However, trading volumes made an impressive jump of 140.1% to HKD3.2tn, with trading volume for US stocks at HKD2.3tn, and that of Hong Kong stocks at HKD916bn, fuelled by DeepSeek-induced market rally which reignited investor interest.

Fuelled by the performance of these key metrics, Futu Holdings reported 81.1% y/y increase in total revenues to HKD4,694.6m in Q1 25, with gross profit increasing by 85.9% to HKD3,945.7m. Net income jumped 107% to HKD2,142.7m, along with an expansion in margins to 45.6% from 39.9%.

On track to achieve new funded accounts guidance

Hong Kong continues to drive new funded accounts, supported by the company’s marketing campaigns, leveraging the hot market rally and IPO boom. On the other hand, after making significant inroads into the Malaysian market and gaining market share, the company posted the fastest sequential growth in new funded accounts from the country, highlighting the presence of headroom for further growth. In Japan, new funded accounts continued to rise, reaching an historic high, while growth in US accelerated on the back of enhanced offerings for active traders and supported by advertising campaigns, which boosted brand visibility. Hence, taking cue from the positive start to the year, the group remained positive on its ability to meet the guidance of 800,000 net new funded accounts in 2025.

Total client assets continued to rise, driven by 11.4% q/q increase in Singapore. Further, average client assets in Canada and Australia logged five straight quarters of sequential increase, strengthening the overall asset base.

Successful execution of several high-profile IPOs

In Q1 25, Futu Holdings acted as joint lead manager for several high-profile Hong Kong IPOs, including those of Bloks Group and Guming Holdings. The group was the exclusive online broker for IPO distribution for both these transactions. The company ranked top amongst all brokers in the number of subscribers and total subscription amount in the MIXUE Group IPO, which saw 70,000 clients contributing over HKD1tn in subscriptions. This demonstrates the company's scale and expertise in providing enhanced product offerings to investors.

NII and brokerage commission driving topline

The company posted a solid Net Interest Income (NII) CAGR of 33.1% over FY 21-24, reaching HKD5.1bn. Brokerage commission increased at a CAGR of 15.6% over the same period to HKD6bn in FY 24. As a result, total revenue rose at a CAGR of 21.1% to HKD12bn in FY 24. Net profit surged at a CAGR of 24.6% to HKD5.4bn in FY 24.

Positive earnings trajectory and consistent raising of equity capital helped the company to strengthen its cash position to HKD11.7bn at end-FY 24 from HKD4.6bn at end-FY 21. Total debt decreased from HKD11.1bn at end-FY 21 to HKD8.6bn at end-FY 24.

In comparison, Robinhood Markets, a global peer, reported a higher NII CAGR of 62.9% over the past five years, reaching $1.1bn in FY 24, while brokerage commission rose at a modest CAGR of 5.6% to $1.7bn in FY 24.

Decent upside potential

Over the past 12 months, the company's stock has delivered robust returns of approximately 90%, reflecting a positive fundamental trajectory. However, in comparison, Robinhood Markets’ stock outperformed with even higher returns of 305%.

Despite the sharp run-up in the share prices, the company is trading at a discount to Robinhood Markets. Futu Holdings is currently trading at a P/B of 3.8x, which is lower than that of Robinhood Markets (10.1x). However, it is trading higher than its 3-year historical average of 2.5x.

Futu Holdings is mainly liked by 15 analysts, with 13 having ‘Buy’ ratings and two having ‘Hold’ ratings for an average target price of HKD1,146.2, implying 20% upside potential from its current level. In addition, analysts estimate a net profit CAGR of 23.8% over FY 24-27, reaching HKD10.3bn with margins of 46.1% in FY 27, with EPS expected to increase to HKD76.8 in FY 27 from HKD38.9 in FY 24. Likewise, analysts estimate a net profit CAGR of 5.4% for Robinhood Markets over the same period.

Overall, the group appears to be set to post growth over the long term, supported by increasing trading volumes, robust rise in number of funded accounts and execution of key IPOs as the preferred distribution partner. However, Futu Holdings’ business makes it prone to some risks, including lower risk appetite from investors, subdued market performance, and evolving regulatory requirements.