On August 14, JPMorgan released a research report maintaining an "overweight" rating on Futu Holdings and slightly lowering the target price from $91 to $90. JPMorgan Chase pointed out the following highlights:

JPM expects teens growth year-on-year growth in revenue and net profit for Futu in the second quarter. JPM believes now is a good opportunity to add on the back of the following.

1) Futu’s fundamentals remain strong on the back of decent AUM growth and new product launches.

2) The steeper and faster Federal Reserve cuts, driven by disinflation, are positive for equity markets. JPM also expects key stocks in the KWEB index to report decent 2Q numbers, which is seen as positive for Futu.

3) Futu is currently trading at a 13x P/E and 18% ROE on 2024 estimates, representing a significant discount compared to its comparable peers that trade at an average of 20x P/E and approximately 11% ROE. With stable overseas expansion, client growth and new product launches, JPM believes risk reward is attractive at current levels, and reiterates their OW rating.

JPM's Dec-24 price target of US$90 is derived from a PEG valuation methodology, based on a 21% 2024E-26E EPS CAGR and 0.85 PEG, in line with listed global online broker peers.

Downside risks include:

1) weakness in China tech stocks, leading to lackluster trading volume growth;

2) regulatory risk;

3) lower-than-expected growth in the number of paying clients.

Upside risks include:

1) higher-than-expected growth in paying client numbers;

2) stronger-than-expected trading volume growth;

3) better-than-expected operating efficiency improvement.