Futu Holdings Ltd (MooMoo)

As of 2024-11-19, the Intrinsic Value of $Futu Holdings Ltd (FUTU.US)$ is 811.49 USD. This FUTU valuation is based on the model Discounted Cash Flows (Growth Exit 5Y). With the current market price of 92.30 USD, the upside of Futu Holdings Ltd is 779.20%.

Since the intrinsic value calculations based on Discounted Cash Flow Intrinsic Value: DCF (FCF Based), or Discounted Earnings Intrinsic Value: DCF (Earnings Based) cannot be applied to companies without consistent revenue and earnings, GuruFocus developed a valuation model based on normalized Free Cash Flow and Book Value of the company. The details of how we calculate the intrinsic value of stocks are described in detail here.

As of today (2024-11-19), Futu Holdings's Intrinsic Value: Projected FCF is $32.10. The stock price of Futu Holdings is $92.30. Therefore, Futu Holdings's Price-to-Intrinsic-Value-Projected-FCF of today is 2.9.

The historical rank and industry rank for Futu Holdings's Intrinsic Value: Projected FCF or its related term are showing as below:

During the past 8 years, the highest Price-to-Intrinsic-Value-Projected-FCF of Futu Holdings was 2.91. The lowest was 1.54. And the median was 1.66.

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Peter Lynch Fair Value applies to growing companies. The ideal range for the growth rate is between 10 - 20% a year. Peter Lynch thinks that the fair P/E value for a growth company equals its growth rate, that is PEG = 1. The earnings here is trailing twelve month (TTM) earnings. For non-bank companies, the growth rate we use is the average growth rate for EBITDA per share over the past 5 years. For Banks, the growth rate we use is the average growth rate for Book Value per share over the past 5 years. If 5-Year Growth Rate is greater than 25% a year, we use 25. If 5-Year Growth Rate is smaller than 5% a year, we do not calculate Peter Lynch Fair Value.

Here, as of today, Futu Holdings's PEG is 1. Futu Holdings's 5-Year TTM EBITDA Growth Rate is 25. Futu Holdings's EPS without NRI for the trailing twelve months (TTM) ended in Jun. 2024 was $3.87. Therefore, the Peter Lynch Fair Value for today is $96.68.

As of today (2024-11-19), Futu Holdings's share price is $92.30. Futu Holdings's Peter Lynch fair value is $96.68. Therefore, Futu Holdings's Price to Peter Lynch Fair Value Ratio for today is 0.95.

The historical rank and industry rank for Futu Holdings's Peter Lynch Fair Value or its related term are showing as below:

During the past 8 years, the highest Price to Peter Lynch Fair Value Ratio of Futu Holdings was 0.97. The lowest was 0.44. And the median was 0.58.

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A Moat Matrix is a framework used to analyze a company’s competitive advantages, commonly referred to as an economic moat. For Futu Holdings Ltd (a China-based online brokerage and wealth management platform), here’s an analysis of its moat matrix, categorized into the five typical types of economic moats:

1. Network Effects

• Strength: Moderate to High
• Futu operates a platform (Futu Niuniu) where user engagement and activity create a network effect. As more users join, the value of the platform increases due to social features like discussions, investment forums, and educational resources.
• Risks: High competition from platforms like Tiger Brokers and traditional financial institutions. Regulations in China can impact the scaling of network effects.

2. Switching Costs

• Strength: Moderate
• Once users are onboarded to Futu’s platform, they become accustomed to its interface, tools, and resources, making it somewhat inconvenient to switch. Integration with other wealth management tools also adds a layer of stickiness.
• Risks: Price-sensitive users may move to platforms offering lower fees or better incentives.

3. Cost Advantages

• Strength: Low to Moderate
• Futu benefits from economies of scale and efficient technology deployment, allowing it to offer competitive pricing. However, its cost advantages are not unique, as competitors like Tiger Brokers and Webull can replicate similar models.
• Risks: Intense price wars in the fintech industry can erode margins.

4. Intangible Assets

• Strength: Moderate
• Futu’s brand reputation in Asia as a reliable and user-friendly platform is a valuable intangible asset. Its licenses and regulatory compliance also serve as barriers to entry for new competitors.
• Risks: Regulatory scrutiny and negative publicity could harm its brand value.

5. Efficient Scale

• Strength: Moderate
• Futu operates in a niche segment that benefits from a growing middle class and rising demand for online investment solutions in Asia. Its technology infrastructure allows it to scale efficiently.
• Risks: Overreliance on specific markets like China and Hong Kong increases exposure to local economic and regulatory risks.

Final Takeaway:

Futu Holdings has a moderate moat, primarily driven by network effects and intangible assets, but the competitive landscape and regulatory risks limit the durability of its advantages. Its ability to maintain its moat will depend on its capacity to innovate, expand geographically, and navigate regulatory challenges effectively.

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