4Q robust growth in-line; geographic diversification saw sequential improvement

4Q robust growth in-line; geographic diversificationsaw sequential improvement Futureleased4Q/FY25 earnings results,withtotal revenue/non-GAAP net profit slightlybeatingour estimates by 2%/4%(report)to HK$6.44bn/HK$3.46bn in 4Q25, up45%/77% YoY and 0.6%/4.3% QoQ. The bottom-line improvement was driven bystrengthenedexpensecontrolsin 4Q25, of which total costs and operating expensesslid 8.2%/8.3% QoQ to HK$729mn/HK$1.56bn,betterthan ourestimates by 9%/2%,bringing the gross margin and operating margin to 88.7%/64.4%, up 1.1pct/3.4pct QoQand 6.2pct/14.4pct YoY, both a record high since 2023. Key operating metrics werebroadly in-line in 4Q25,andwe see thecall highlightscentering on1)arobust newclient acquisition target of800k in 2026alongsidea new market entry plan in Asia; 2)1Q26 netasset inflows on track toreachan all-time high, with adouble-digit sequentialrise; 3) 4Q25 crypto trading volumereachedHK$20bnwiththepenetrationin terms oftrading clientslifting across HK, Singapore,andthe US markets; 4) ADS tradingvolumescontributed <10%of US stockturnoverin 4Q25, indicating a more diversifiedtrading structure; 5) 55% of total funded accountsadded from ex-Greater Chinamarkets, primarily led by SGandthe US. Mgmt.alsotouched on progress of AirstarBank andthe phase IIevaluationof VATPlicense,whichwould still requiresometimefor regulatory clarity.Tofactorincontinued strong netassetinflows and robust clientacquisition, we modestlyadjust our FY26-28E EPS forecasts to HK$94/HK$110/HK$124. Maintain BUYwith TPunchangedat US$228. Target PriceUS$228.00Up/Downside59.4%Current PriceUS$143.01 China Financials Nika MA(852) 3900 0805nikama@cmbi.com.hk Stock Data 4Q25KeyHighlights: [1]Top/bottom-line a slight beat:Total revenuerecorded at HK$6.44bn in 4Q25,a beat to our estimate of HK$6.3bn by 2%. GAAP/Non-GAAP net income reportedatHK$3.4bn/HK$3.5bn, up 5.0%/4.3% QoQand81%/77% YoY, outperformingourestimatesby 4%/4%.4Q25topline growth wasprimarilydriven by a surge in otherincome, up 42%/78% QoQ/YoY, thanks to higher fund distributionincomeand IPOsubscription servicecharge. Brokerage commission income and interest incomeslid 4.9%/flat QoQbut up 35%/50% YoYin 4Q, due to increased market volatilities. [2] Total/newfunded accounts:234knew funded accounts have been added in4Q, bringing the full-year addition to 954k,marking a19.3% increase vs.mgmt.year-start guidance of 800k. Total number of funded accounts amounted to 3.4mn,up 39.6% YoY/7.5% QoQ. HK and Malaysia sustained the two largest contributors,totalling >50% of new client acquisition while SG/JP/US markets made up in teens.Geographic diversification continued to enhance, for which total number of fundedaccounts in ex-Greater China markets accounted for 55% in 4Q25, a record high. Related reports: [3] Robust client AUM:Totalclient AUM recorded at HK$1.23tn, up 66% YoY/flatQoQ, in line with ourestimate (Table).Net asset inflowsmoderatedQoQwith thedepreciation of HK stock holdings,which collectively weighed onAUM growth. WMbalance grew 2.3% QoQ and62% YoY to HK$179.6bn (15% mix),while clients’idle cash sequentially dropped 11% to HK$113bn (9% mix) and stock holding wasflat QoQ at HK$937bn (76% mix). Client AUM in Greater Chinaregionsremainedabove 80%(CMBI est),butsequentially improved amid geographic diversification. 1.FutuHoldings(FUTU US)-4Q25Preview:Resilient key metrics withmodest sequential growth amid marketturbulence, Mar9, 2026 2.Futu Holdings(FUTU US)-3Qearningsa strong beat,driven byresilientnet asset inflows and NIIrecovery, Nov 20, 2025 [4]Stock tradingvolume mixed in US/HK:In 4Q25,total tradingvolumereacheda historical highof HK$3.98tn in 4Q25, up 38% YoY/2% QoQ,amongwhichUSstock turnover trended up 17% QoQ to HK$3.04tn (77% mix)driven by strong clientinterest in AI-themed stocks. HKstock turnoverdipped 31% QoQ in 4Q25, draggedby subdued market sentiment (i.e. 4Q25 HSI/HSTECH:-5%/-15%), partially offsetby increased momentum in gold and precious metal-related trading activities. 4Q’stradingvelocity (net of WM balance) fell to 15x (vs. our estimate:14.8x), broadly inline. Blended commission yield dropped by 0.5bpsQoQ to 7.0bps,given thedilution of clients’ tradingin a greater amount ofhigher-priced US stocks andoptions. Notably,ADS tradingvolumemade up less than10%oftotalUSturnoverin 4Q25. 3.Futu Holdings (FUTU US)-Marketingfeedback: short-term views mixed; 3QEPSupside to reinforce long-termconvictions, Oct 28, 2025 4.Futu Holdings (FUTU US)-Pioneeredone-stop financial services platform torideon crypto advancements;InitiateBUY, Oct 14, 2025 [5] Resilient interestincomedespiteFed rate cuts.Interest incomerose 50%YoY/flat QoQ at HK$3.04bn in 4Q25, driven by higher contributions from securities lending, bank depositsand margin financing. MFSL balance grew 7.3% QoQ toHK$67.7bn, thanks tohigher interest in US stock margin trading. Despite50bpsrate cuts,we seeavg. 3M HIBOR normalized back to above 3.3% in 4Q25, whichsupportedFutu’s interest yieldfor bank depo