Q1 2021 Futu Holdings Ltd Earnings Call
Hello, Ladies and gentlemen, welcome to <unk> Holdings first quarter 2021 conference call at this time, all participants are in a listen only mode.
After managements prepared remarks, there will be a question and answer session.
Today's conference call and it's being recorded if you have any objections you may disconnect at this time.
I would now like you've done a gone from Silva P. A.
Host for today's conference call Mr. Daniel Zhang.
Chief of staff and head of IR, absolutely Pease go ahead Sir.
Thanks, operator, and thank you for joining us today to just a stellar first quarter 2021 earnings results joining.
Joining me on the call today are Mr leaf Li Chairman and Chief Executive Officer, Arthur Chen Chief Financial Officer, and Robin sheet Senior Vice President.
And I'll see a reminder, today's call may include forward looking statements, which represent the company's belief regarding future events.
By their nature are not certain and are outside the company's control.
Forward looking statements involve inherent risks and uncertainties.
We caution you that a number of important factors could cause actual results to differ materially from those containing any forward looking statements.
For more information about a potential risks and uncertainties. Please refer to the company's filings with the SEC, including its registration statement.
So with that I will now turn the call over to leaf leaf will make his comments and Chinese and I will translate.
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Hello, everyone. Thank you for joining the earnings call today.
We're excited to announce that we started off a year with robust growth across our operating and financial matrices.
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Or a net paying client addition was approximately 273000 and bringing the total number of paying clients to over 790000, representing 231% yogurt year credit.
3 months into the year, we already achieved 39% of our full year growth target.
For the first quarter over 70% of net additions came from Hong Kong, Singapore and other overseas markets for.
Organic growth continued to contribute over 50% of our net new paying clients.
Despite rapid client base expansion or a quarterly play and client churn rate remains a low 2%.
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And what's this all leads as a class within that.
And as their official debut and Singapore on March <unk>, we have experienced significant growth and client acquisition.
We're a superior product experience and laser focus on client servicing coupled with our online and offline advertising and a strong word of mouth referral has helped us quickly capture the mind share a singaporeans.
Characterized by a large and Apple and Chinese population deepened mature capital markets high penetration, a financial services and rising rate a digitalization.
Singapore presents a huge market opportunity, let alone a strategic importance as an anchor point into the broader Austin market.
With a strong growth momentum trend and into the second quarter, we are confident to unveil a rapid growth and Singapore.
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In terms of client assets, our average asset balance per paying client climbed to 585000, Hong Kong dollars and back.
Your highest since 2016.
As a quarter and total client assets reached $462 2 billion, Hong Kong dollars, representing 368% growth on a year over year basis, and 62% growth on a quarter over quarter basis.
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Oh, a trading volume and the quarter was $2 2 trillion Hong Kong dollars.
A 278% year over year.
U S stock trading contribute at about 63% of the total trading volume and.
And the past quarter, we launched OSB futures from the Japan Exchange group and Singapore stock trading as part of our continued efforts to diversify a trading offering.
And so that downside from that.
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Our wealth management business money, plus established new partnerships with for a reputable asset managers and the quarter, including Wells Fargo income partners, Aberdeen standard and being why Mellon.
As a quarter and over 59000 clients helped total assets, a $13 1 billion and Hong Kong dollars the wealth management.
Of the 189% and 108% year over year, respectively.
As money pluses distribution capabilities get increasingly recognized by asset managers and forego entered into an exclusive agreement with us to distribute a Hong Kong dollar denominated retail share class a as China's small and mid cap growth line.
1 of its flagship product and the region.
And the first quarter, we started to offer a flagship TMT hedge fund managed by a globally renowned as a manager to a qualified investors.
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As a quarter and our enterprise business for you to irony had a 150 to IPO and IR claims as well as 200 and Aesop solution clients.
And the first quarter, we participated and all Chinese ADR, a secondary listing in Hong Kong and we're the only online broker and the selling groups and the Hong Kong Ipos as quite a show Baidu and Billy Billy.
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Enterprise accounts function in our social community gets increasingly adopted by a listed company to engage with over 14 million retail investors interested in Hong Kong and U S stock trading.
By the end of the first quarter over 500 list a company a set of enterprise accounts with us to promote their products and services provide business updates and livestream earnings call.
As of today 9 enterprise accounts have amassed over 1 million followers.
Let's say companies buy and indispensable stakeholder in our ecosystem.
And their engagement has greatly diversified our content offerings, and thereby increasing user stickiness and retention.
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Next I'd like to invite our CFO Arthur to discuss our financial performance.
Thanks leave out of a Daniel please allow me to walk you through our financial performance and the first quarter all the numbers on a hold all the unless otherwise noted.
Although total revenue was $2 2 billion and increase of 349% year over year and 86% Q on Q.
Brokerage Commission and a handling charge income was $1 3 billion and increase of 343% year over year and 84% Q on Q.
The growth was mainly driven by.
By 278% year over year, our total trading volume increase.
A blended commission rate and our clients trading velocity remained resilient compared with last quarter.
Interest income was 615 9 million a increase of 300, a 356% year over year and the 96% Q on Q increase in margin financing interest income was mainly driven by a strong growth in daily average margin financing balance higher IPO financing.
Interest income due to a very active Hong Kong IPO market, and the first quarter and increasing our security and borrowing and the lending business.
Other income was $200, a 1 million and increase of 370% year over year and a 6 9% Q on Q, a strong growth was primarily driven by and increasing our IPO subscription service charge income and the currency exchange service income.
In terms of costs, our total cost for.
443 million, a increase of 272, 6% year over year, and 83% a Q on Q.
Brokerage Commission and handling charges expenses were 214 million and increase of 327% for a 15 minute and the first quarter of 2020.
The increase was largely in line with the growth of our brokerage commission and handling charge income.
Okay.
Interest expenses was 106 to 8 million and increase of 406% from 33 minute and the fourth quarter of 2020.
The growth was primarily due to a higher margin financing and interest expenses and increase in our security borrowing and lending business.
Processing and servicing costs were 62 million and increase of 7% to 8% from 35 minute and the first quarter for 2020.
We continue increased crowd a service expenses and add another 300 protein controller collect with a trading system of the Hong Kong stock change for execute a large number of concurrently a Hong Kong stock trade.
As a result, our total gross profit was $1 8 billion and increase of 373% year over year, and a 7% Q on Q.
Gross profit margin increased from 76% in the first quarter of 2020 to near to 88 per cent in the first quarter of this year, thanks to higher operating leverage as a result of a larger business scale.
Our total operating expenses was 419 million and increase a 149% from a 100 like a 7 million in the first quarter 2020, So a break at the Dol R&D expenses was 137 million and increase of 63% from a day for me that and the first quarter of 2020.
And we further investing into R&D to support our new product offerings.
So the and a marketing expenses was 275 million and a increase of 321% year over year and a 144% Q on Q. The increase were primarily due to higher branding and a marketing spending, especially in the international market to cultivate brand image and acquire new clients if a.
And we compare a client acquisition cost in the Hong Kong and the China areas alone our CSC a number at this quarter is largely in line with a number in the last quarter.
G&A expenses was 7 to 8 million a increase of 65% year over year. The increase was primarily due to the increase and the head of calling for jet for G&A personnel.
As a result, our net income increased by 6 5 times to 1 2 billion from 155 minute and the fourth quarter of 2020.
In April we also completed a follow on offering with net proceeds of approximately 1 point for being a U S. Dollars. The proceeds will be used to support a larger margin financing balance our international market expansion, new licensing applications potential investment and acquisition opportunities and other general corporate.
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That concludes our prepared remarks, we'd now like to open the call to questions. Operator. Please go ahead.
Suddenly you, Sir ladies and gentlemen, we will now begin the question and answer session.
If you wish to ask a question. Please press star 1 on your telephone keypad and wait for your name to be announced once again and a scholar 1 to ask a question.
No.
If you have a first question is coming from the line of Catherine Liu from Morgan Stanley. Please go ahead.
Yes.
Thanks.
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Thank you very much forgive me this opportunity to ask questions. A this is Katherine for Morgan Sunday. So I have 2 questions to race first is like a management. Please give some introduction a or some a briefing in terms of a.
The second a quote her this year a trend in terms of trading and velocity a client acquisition.
Gross rates et cetera, and also in a lighthouse the first quarter, a strong growth well management's risk guidance in terms of a full year for example, grocery and paying clients etcetera and second question is a could.
Management, please keep some a guidance or introduction and in terms of the breakdown for clients by geography to a bike.
Rafi.
And then a way.
Note that Singapore, a potential they see a very strong growth and a man from please give us some guy D and C. In terms of the for a growing a growth trend in a Singapore market. Thank you.
Sure a catherine let.
Let me also your second question first I will show you a our clients breakdown and the first quarter I will leave a you know.
For the second a trend.
A cyclical other trial and also the your questions a all other guidance to Robyn and a leaf a Robyn will also give you some colors in terms of all clad acquisitions and also the client profile and Singapore all of this particular market and the first quarters are a classic basis, Singapore and the U S. A comfortable 25% of all and you a pain.
And clients acquired and the fourth quarter and the remaining 75 per cent was almost evenly split.
And mainland China, and also Hong Kong, I think slightly higher and in Hong Kong pump a well.
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Leaf to give you a comment is how about your first question.
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And therefore for us as a a bedroom a challenging Archie a excuses issues.
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So while you're also a tendency for charter.
Although we have achieved 39 percentage of our full year and paying client growth target and the first quarter for the time being we will not adjust our full year target.
Well, we definitely believe that or a product health very differentiated value proposition to overseas markets and in fact since we entered the Singapore market officially in March and we asked and very strong client growth and that momentum has continued into the second quarter and so we also reckon that the brokerage business is positively correlated.
With a market performance with market sentiment with with a number of Ipos and we understand that right now the market has a disagreement.
Agreement over how the market performance for all involved for the rest of Europe, and so we're not adjust or we will not adjust over a full year kind of pinpoint growth targets for now and we made a give a updated guidance during our <unk> earnings call if needed.
The new way of a fluent and tissue point of view strategically. This is a question for you.
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Yeah.
But we have seen that and the market experienced some level of a pullback since mid February and we believe that our users trading and sentiment has been affected more or less and we think that's perfectly normal and we.
And we feel like the market's still gets a lot of attention right now and kind of under the rotation from growth to value stocks. There are still a number of stocks, they're performing really really well.
And from the standpoint of a client assets, we have seen that for a March the first 2 last Friday, which is a may the 16th and all.
And this on every single trading day, we see a positive net asset inflow, except for a couple of trading days.
So it's a very positive sign that our clients are continuously putting assets into our platform and for us paint.
Paying quite a number of paying client retention and client asset or a 3 kpis and we attach much more importance to these 3 mattresses and some short term volatility and in the claims trading volume.
Yeah.
And let me just add a little bad for your question about a interestingly for clients profile.
And so so far based and based on what we have seen again. This is only based on about 2 and 2 and a half phones a data that we have seen so far.
Our Singapore clients average and meet and ages, it's almost identical to a debt of mainland China and Hong Kong clients.
And in terms of their a client assets.
Still lacks and actually and Theres, a pretty big discrepancy between a route.
Between the average client assets of our Singapore clients and.
And are a mainland China clients, but we think that's normal and based on a experience when we enter a new market and it will take some time for a plans outlets and clients trading volume to catch up and we'll probably give more details around our client profile and next couple of quarters.
Thank you.
Yeah.
Thank you Li.
Our next question this is coming from the line of.
Jackie <unk> from China Renaissance. Please go ahead.
Hey, guys. They want anytime you're lucky when and if you wait a while you're going to be considered against you that you'll be selling down and either you see.
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And then the other revenue with a breakdown.
And so congrats on the great results of.
2 questions number 1 is about a our compensation.
And we actually saw a some competitors.
For simple in Hong Kong market increase increasing their marketing efforts.
And we also have here some Asia brokers may enter the U S and and the Hong Kong and stop trading business.
And so regarding the potential increasing competition for our markets.
And customers from mainland and and.
Hong Kong.
Do we concern about the hour a customer acquisition cost and the trading Commission.
Price a pricing pressure and a number 2 is about a housekeeping question.
Could you provide us.
A rough breakdown of our interest.
Income and also other revenue thank you.
Sure Jackie let me answer your second question in terms of housekeeping and housekeeping and financial numbers for the first question to my colleagues for all our CEO a leaf and <unk>.
And for the interest income breakdown, roughly and a lot of the interest income a rising from the margin financing a comfortable 60 to 65 per cent of total interest income a the remaining interest income naturally derived from our clients at a Idaho cash deposit and also for <unk>.
In terms of the other income actually you know a 6 2 major part 1 is a the IPO subscription service charge.
Normally we charge 50 to $100 Hong Kong dollars per persons when each participate participant in the Hong Kong Ipos.
A significant part of it is the foreign exchange.
The service charge, a you know.
And so many of our clients trade in both in Hong Kong and a U S market. So day to have the demand for the foreign exchange a piece to a pause I think roughly a will contribute 70% to 75% of our total other income to remain path will belong to such us a pause.
Distribution income from all while spending from a product and other service offerings.
Thank you.
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So the unions of interest as a dominant.
We have as a whole do besides that.
She is going to have and the other places about that other terms and children's appear on shelf.
And then there is homegrown alternative income.
So from our inception.
Operating and a very crowded market and we don't think the market is going to get a less competitive going forward and we indeed have seen some players offering zero commission, but we don't think the change and the competitive landscape will have a.
And with pressure on a condition right and.
Because in Hong Kong, and there's the stamp duty, which is 10 debt and for US we offer a 3 this for Hong Kong trading and the marginal and benefits for our clients I've heard from lowering and air conditioning right beyond that 3 beds.
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And for some of the a share brokers and they already have Hong Kong licensed entities and besides we also see and some other online brokers don't want to enter the Hong Kong local market.
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So maybe I'll talk a little a bit more about the online brokers due to the similarities and the business model.
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And I just wondered.
First of all and we definitely welcome online brokers to enter the Hong Kong market with more of these players entering the Hong Kong market, we can educate the market together and healthy online brokerage industry as a whole gain more industry recognition.
So that was obviously a going along with volume for those who don't want for them to actually all day.
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Now there are 2 major types of online brokers that provide a Hong Kong stock trading services and the first type of a Hong Kong brokers, they're a licensed by SFC and hold SSD licenses and a regulated by the SFC and free to as an example of this first type and a second type are the only and brokers that hold.
<unk>, that's a third domicile and it's not regulated by the Hong Kong and SSC for example, and.
A license from New Zealand.
And this is a second type of using a third party domicile license to provide a trading in Hong Kong.
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Just a jointly other unique.
Is that sometimes for myself trenching, essentially and you guys younger and returns on that day.
Thomas as yet.
And we all know he has a C as more stringent regulatory requirements than some other markets and a more prudent when given a licenses.
So for the second type of volume brokers that we just mentioned.
They are to get a license in Hong Kong, but they've been solved the issue of regulatory incongruity and advance and.
And from a regulatory standpoint, SFC and will not allow these online brokers to operate under a more relaxed deregulatory framework.
This means that once the line brokers hold licenses they will need to migrate their existing clients and their existing businesses into the new entity that is regulated by the SFC and and this issue cannot be solved very well, it's highly unlikely that they will get a license and Hong Kong.
And I think that's probably why another online brokerage peer of ours have been talking about getting a license and Hong Kong soon for the past 3 years, but still have not managed to get in line.
And because based on a understanding under normal circumstances, there's no way that it would take so long to apply for a new Hong Kong brokerage license.
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We'll go to a Denver, sometimes usually other music label for looking at producing well.
For most equity a qualifying and this suggests that.
And as Undock payout and compare them to deliver income.
COVID-19, yes, we do have a them, but EBIT provision.
And you've got strength and funeral and Shanghai says on the Juul will go for actual doubtful.
For the equivalent of a seemed to jump in a broader suite and give it.
And secondly, we don't think the other potential entry of other online brokerage companies will have a negative impact on futures market share and Hong Kong.
While the first reason as bad a financial services. It really takes a big position for for our clients to choose a financial services platform and there is the psychological barrier for clients to actually and trust their assets with a financial services platform and.
And for food too.
We have very outstanding shareholder base.
We have shareholders like Tencent, a really instill trust into our brand and.
And on top of that and we have spent the past 8 years cultivating our Brandon mentioned, Hong Kong, gaining user recognition and capturing the mind share with a Hong Kong local users.
And for a financial services company that is new to Hong Kong and we'll take a lot of time for them to get the same level of trust that we've been able to garner in the past 8 years.
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And secondly for the newcomers and they can only be competitive if they can offer a very differentiated value proposition otherwise it'll be very difficult for them to replace the existing platforms and.
And food to a has built a very comprehensive business and it has huge entry barriers and we've invested significantly into our account opening into our trading infrastructure market information and services and social community et cetera, and many of our product offerings and really set industry standards and.
The other online brokerage peers and you just spend a lot of time to catch up to where we are today.
Let alone after a offering differentiated products and services and on top of that we have never stopped innovating.
So if you suddenly and virtual attendant at other Jim why don't you assume a vinci <unk> towards that.
Familiar with video assumptions that Mayo is somewhat similar.
Got it and then we're coming back those out on a price.
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And we seem to change and for the SFC Genworth Delta with a K a.
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That's a whole let me assure that SFC that John Jim That's a paradigm younger other casualty congrats erosion from a glue.
Yes, those geos solution for a seamless yet.
And a third plane if the regulatory congruity issue that we just mentioned.
And as we discussed earlier and some of the online peers have already started and acquiring a Hong Kong local clients without a Hong Kong license and.
And after they acquired a license they probably will then a lot of time migrating their existing Hong Kong clients.
To the new entity that is heavily regulated by the SFC and that's really stringent <unk> and AML procedures and.
And this will be a very cumbersome process.
Definitely with some sort of attrition and for the other parties that have not upgraded and Hong Kong.
And so far after they got the license and they still need to kind of kickstart a very.
Stringent account opening and <unk> procedure under the supervision and SFC and this will take time for them to adjust to and take time for them to get familiarized with.
And Youll see a.
The only able to demo and go through it.
For the benzene Joseph and talented global brands.
Okay.
Let's use a shelf for a walk from that just a little.
And I forgot and until it does.
And don't.
<unk> systems, and also put us in a little bit.
No other.
So we're seeing a shortfall of about losing some share.
Young Barclays and Lindsay.
She also and work with Sungard and the car Park.
From a <unk>.
Congo, and Lasalle and I'm, saying, you're buying as a book and Basel judging whats onto the total goodwill.
That's a it's a agenda gpus and sourcing.
Got you and then a question for the thought about putting a.
For boxing.
And as from the modern year with a credit.
This has a means yes thats a good.
Well maybe easier.
Your line.
John cohorts and we've talked about I thought it was absolutely. A example, choosing and Chen with other pieces to that.
That's up a theater genworth and sustainable.
It sounds a achieved a homegoods and Gary.
We're meeting with a pump.
Unfortunately, the margin financing business is highly contingent on the capital on the company's capital base and the margin financing capital needs to be gradually accumulated through the long term collaboration with a commercial bank and Hong Kong.
And the Hong Kong based on Sse's regulation a day.
Margin financing balance debt a broker can support a is limited to a 5 times a its capital base. So first of all they need to inject a lot of capital into their license entity and Hong Kong.
To bolster their net assets and on top of that and they need to secure additional financing from the commercial banks and Hong Kong and from our experience the Hong Kong commercial banks are generally very conservative and they are only willing to offer additional credit lines altura and kind of a long term communication and long term collaboration.
So its impractical for for these new comers to GAAP to garner a lot of.
Capital in a short period of time and this will definitely put constraints on the margin financing business, especially the IPO margin financing business.
And we realized that some of the other peers are trying to migrate their clients from the interactive broker accounts to their own account system and.
And if their own accounts and attendance under the supervision is a S.
The margin financing capital issue that we just mentioned will be further enhanced.
And so all of Thats, obviously for but you eventually from shelf.
It seems a sedan is India.
For qualifying and a surgeon.
And just based off of a mainstream but gulfport estimates are for the most seasonal but for EOG.
But all other provinces, Georgia Julien.
And let's say other.
Human bouncing off a geological.
A few brief and Jamba institutional flows for the other molecules and I'll, let Jean Jacques for a whole.
I'm on a phone with Johnny for TSMC for more branch and that you've got.
Thanks for your line is done for yourself.
A simple yes.
As a sitting a little bit leasing that's for you won't see the standouts from the divestitures.
And with a number for coal.
So there is other IPO, it's just hard to do bottleneck from your job.
A question here.
She doesn't have a truckload so just wanted to let you go.
So you sound like you do a bit.
And I'm not just as they've got to make sure. It's a bank that Sean Botswana.
And you won't be cohort a giant.
Joe you chip.
The fifth point is that the Hong Kong and execution and clearing system need a lot a castle and time to invest and the R&D textbook is a very lengthy process.
And so to spend 8 years to construct a highly stable and scalable execution and clearing system with a 90, 996% and service availability rate.
And then.
Very advanced trading a 10 has a high entry barriers.
And when the other brokers entered a Hong Kong market for in.
A short period of time, they probably need to rely on a third party vendor to provide this execution system.
It means that the stability of the system will be outside of their control for a considerable amount of time.
And so this may lead to trade congestion issues and.
When there is extreme market volatility or when hot Ipos take place so and the short term it will be very difficult for them to match.
And I and servicing quality that for you too can provide.
So what's analysis for a minute preliminary auctions.
Well, that's a bunch of a jewelry sunglasses and I think a sonya.
You'll get a lot of things and the hub for listeners will and political.
And a last point and I want to make a side, we have never stopped innovating and progressing and we still keep that Nathan mentality. When we entered into the Hong Kong market and we believe the additional competition and the Hong Kong market will push us to do better.
Thank you.
I just wanted to sell insurance and.
Thank you.
Thank you for you have a question coming from the line of.
For you from TICC Pease go ahead.
Oh go ahead, and I need some of the D.
As he said for the time here, and we'll show and Ingalls and other things.
And sorry, it's Alex you May go a year.
B and C and which I can make a pretty much a sauna, which sounds you enjoy chats and millennials inside a seem to a G I Joe.
All the usual atop each day keeps you from a hydraulic fluids.
Do you think that Jonathan and then just a paid off for me that you see a call me anyway and it just had from Joe you've seen from the total Amazon from Cowen and teach you and Q4 could you just repeat you I'm sure for Youll be useful and they see.
And we'll be digitally.
Yes.
Thanks for management and really studio from CIBC for.
L a and congrats to our exciting results I see our existing business and we're on.
And track and I was wondering if there is any possibility actually we will apply for new brokerage licensees to serve more customers in other areas.
And non small trading products and like bitcoin or other digital currency. Thanks.
Okay. Thank you I will tell you let me answer your first question and so I wouldn't even for a second question to my colleagues, a senior vice president robbing shoot for.
Most of Us and Florida.
And our pipelines for the new license actually I think Youre right. We are doing some preliminary studies.
And other international markets and particular in the ASEAN countries. Therefore, a smith as leaf.
And you've mentioned in the opening remarks, we do think and a Singapore is a very important gateway for a week to entering to the into the ASEAN market as a whole, but now is doing a very preliminary stage and also we are we are doing some feasibility studies.
As a English language speaking country as well.
It's a great joy and literally been tissue and to tell you.
And this has really been a Midwest pseudo mobile which has been a paper.
And when you deal with a 7 day.
And net charge off highway a a couple of months now anyway.
Who should a huge share with them at a cheaper.
Because with a digitally.
So we are planning to lounge, crypto trading and to our international clients and the second half of this year and also we will plan to rollout more futures under the CME futures.
Thank you.
And he says.
Thank you.
Thank you.
The next question and this is coming from the line of.
It's really Chong from Jefferies. Please go ahead.
And so I think that's a line.
Okay.
And hopefully you can see that from my heart.
And how what's the banjo traveling and salaries from before.
Oh, I'm, a woman and Joseph.
No problem.
He was in a way.
Oh my.
Hum.
And with.
Sure.
And what you.
And tell you.
Okay.
Yeah.
Hi management, Thanks for taking my question from Jeff.
Congratulations on this call first quarter results and then how about 1 other question.
And did you from currency.
So we're kind of from digital currency market quite we have noticed that prepares for good.
Sales of China have announced that a 2 beds and 2 2.
Michelle and 10 minutes from.
And lastly, too quick to a crazy transaction I'm wondering what about for tools.
Okay.
And that will have a China.
And so.
Uh huh.
Okay.
Okay.
Okay and situate.
And the way to look a bit sort of elements.
Good day and draw <unk> web.
And we thought where share G&A, that's hauser coinsurance and Daniel tying me for you.
Tcf book, such a book with some other future usage, and so that would be somewhere and they ship.
And the whole thing.
Well, maybe we'll see a shadow NAV.
Which means something without equivalents, a conditional new tissue.
We are very much aware of to a different regulatory frameworks under a different jurisdictions and actually we're in a process of applying for a digital currency related licenses and U S, Singapore and Hong Kong.
But what we know for sure is that a will not offered digital currency trading services to mainland China users. Thank you.
Okay.
The next and comes from the line and also come on stream from deal and basically guarantees people okay.
And this is a de la <unk> sensors.
Yeah.
So this isn't going to go with that.
Well what did they all day.
Please go line.
Margin.
Financing business I, just don't want that.
Yes.
Yeah Oh.
And I hope it's about 1.
Hello.
Hum.
And at that level, then combos line.
And there's no more that's a home.
Sorry.
Or what's the time line.
So a couple of step downs.
A war.
And.
And with chemo.
So you don't see a food hall.
Is it from.
Yeah.
Oh Wow.
And they put it out just a.
Simple.
As a whole.
Hum.
And it sounds like a P C.
Sure.
Cool cool down.
Well, it's a woman.
So that's helpful.
Organic growth.
Awesome.
So that's 2019.
Guangzhou.
Hum.
Uh huh.
And it's about.
From a high.
High profile.
Yeah.
Yeah.
Sure.
So I love to talk a little cool.
Hi, Sean.
Sounds good.
Oh yeah.
Okay.
Yeah.
So a paying client I saw from Harman d'amico from Cowen.
So a whole.
A couple of days.
Uh huh.
And.
And so congratulations on a day.
And what's wrong, what's a ways out.
2 questions. The first question is about a margin.
After a.
Uh huh.
Hello.
A fourth quarter for a further in.
In April a little further.
Our strength and it's quite something.
Are you try to increase.
Ratio of a man.
And you and financing and securities loan balance and performance.
And it's all total client assets and the second question is about a client acquisition you mentioned that does keep a handoff Samuel client April organic sales.
About a half a watt.
And acquisition channel for the other half I'll try and ask specifically and pay more attention about top class.
And how much that's a country deals to new clients and how do you a recorded.
And your top client, where you recorded and then.
Oh, no pay and clay you win.
And that's all good.
Or you will wait and hear their stock a basket.
Thank you.
Thank you very much I will answer the first question and I will leave the second question from my colleagues Swabbing and Daniel a.
Number 1 I think we value our paying clients.
From a DCF DCF value perspective, I E. We more for more care of all day up there a lifetime value rather than a near term P&L. They can contribute in terms of our topline or bottom line and therefore, I think we were not very aggressive to encourage our clients to use the margin the coffee and the margin.
And I think involved a very high risks. Therefore, I think it's been a element hesitate and best medications how to let our investors know the risk is far more important all a new York and monetization.
If you look at all a margin balance a.
Financing balance versus our total current assets ratio. This risk ratio historically is in a range of 5% to 7% I think definitely a the offer we.
Finished all along you'll do a placement we do have more sufficient capitals to support all our margin financing business and in particular and all IPO subscription service in Hong Kong, but we will not intention.
To push up.
Our price margin usage, unless they know the risks thank you.
Hi, I'm a this is Daniel I'll take your second question on client acquisition. So about 50 per signed if our new paying clients or from organic growth than about 15% and air from Aesop and group of account opening and the rest 35 percentage roughly evenly split between all.
And in off line advertising as well as the third party channel partners.
So definitely we think that a Hong Kong a high profile Ipos are conducive to a client acquisition, but it's a very difficult for us to attribute certain client base to maybe 1 or 2 single ipos.
But we generally kind of observed a a and increase and uptake in our client acquisition before these ipos take place, but it's very difficult to ascertain which clients come and specifically for the Ipos and for questions case like you mentioned so for a question for employees that have stock options right.
Now there are not counted as a rent paying clients.
Thank you.
And just yet.
Okay.
Thank you.
We did not have any for the questions I would like to hand, the conference back to a host.
And jumping to stay cool.
Thank you operator, and thank you all for joining the earnings call today on behalf of <unk> management team I'd like to thank you for joining our earnings call and if you have any additional questions. Please do not have data and ask me or any of our Investor Relations Representatives. Thank you and good night.
Thank you, ladies and gentlemen, and can take on.
And for debate. Thank you all for you.
You may disconnect now.
[music].