On Friday, Citi adjusted its price target for NASDAQ:FUTU, the stock of Futu Holdings (NASDAQ:FUTU) Limited, to $75.30 from the previous target of $76.90. The firm sustained a Buy rating on the shares.
The adjustment followed Futu's fourth-quarter earnings report, which revealed a non-GAAP net profit after tax (NPAT) of HK$950.5 billion, a decrease of 17.9% quarter-over-quarter and 6.3% year-over-year. This resulted in a full-year non-GAAP NPAT of HK$4.57 billion, falling short of Citi's expectations by 1.4%.
The company's gross profit for the fourth quarter dropped by 11.1% quarter-over-quarter to HK$2.0 billion. This decline was attributed to a combination of weaker brokerage commission income, which decreased by 10.7% quarter-over-quarter due to a 12.2% reduction in trading volume, and a decrease in net interest income by 12.7% quarter-over-quarter. The latter was impacted by lower daily average client cash balances and stock borrowing balances.
Futu's operating profit also experienced a significant decrease, down by 22.5% quarter-over-quarter and 8.5% year-over-year, to HK$1.02 billion. The operating profit margin (OPM) saw a notable decline, dropping by 7.3 percentage points quarter-over-quarter and 5 percentage points year-over-year to 50.1%. Additionally, the company's return on equity (ROE) diminished by 4.4 percentage points quarter-over-quarter and 4.0 percentage points year-over-year to 15.8%.
The company's core leverage ratio also saw a slight reduction, falling by 0.1x quarter-over-quarter to 2.1x. In response to the financial results, Futu has initiated a new share repurchase program, which authorizes the buyback of up to $500 million of its American Depositary Shares (ADSs). The program is set to remain valid until the end of 2025.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.