Q4 2022 Futu Holdings Ltd Earnings Call
Speaker 1: I.
Speaker 2: Hello ladies and gentlemen, welcome to Food2Holdings fourth quarter and full year 2020 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session.
Speaker 2: Today's conference call is being recorded. If you have any objections, you may disconnect at this time.
Speaker 2: And now I'd like to turn the conference over to your host for today's conference call, Daniel Yuan, Chief of Staff to CEO and Head of IRF VU2. Please go ahead, sir. Thanks, operator. And thank you for joining us today to discuss our fourth quarter and full year 2022 earnings resultsaguerrida.org
Speaker 2: believe regarding future events, which by their nature are not certain and are outside of the company's control. More looking statements involving care and risk and uncertainty.
Speaker 2: We caution you that a number of important factors could cause vector results to differ materially from those containing any forward-looking statement.
Speaker 2: For more information about the potential risks and uncertainties, please refer to the company's filings with the SEC, including its registration statement.
Speaker 2: So with that, I will now turn the call over to Lace. Lace will make his comments in Chinese and I will translate.
Speaker 3: Can she tell you can you add in the edge of way?
Speaker 3: Thank you for your attention.
Speaker 3: Can be a young person
Speaker 3: When you do chambberan, go sees. And asway, sir hobandan, go see also of cont hand. And's an. You does the F handard sicing you also often sheap.
Speaker 3: That's beyond the system and eating here. WEq kitchen
Speaker 3: Thank you for your attention.
Speaker 3: Who will fill out the Cao quarter table? Dr. Wilhelm Double aba convince the seventy nineKERIBL obtained it feels we can LU the Kom and set47 the TAL of the
Speaker 3: earling R indion kenenya womanaholl HOA areist value to tankaru pinen su the three cultural bvinaria.
Speaker 3: jing's on UC and drink outingin our N? Ia woman cur with a hingering tub. aios loop parts of that the joshia by you up so and tanks in a woman tamping together the in anienting.
Speaker 2: Thank you all for joining our earnings call today. In the fourth quarter, we added over 42,000 paying clients, down 27% sequentially. Stock markets plummeted in the first half of the quarter, and the certainty surrounds the sustainability of market rebound in the second half affected user sentiment, which led to the deceleration of client acquisition.
Speaker 2: Our total paying clients reached around 1.5 million, representing 20% growth every year.
Speaker 2: In 2022, we managed to add over 240,000 paying claims, exceeding our full year of guidance by 20%. Despite a challenging market max backdrop, our average quarterly client retention rate in 2022 remained above 98%, which speaks to the stickiness of our product.
Speaker 3: That's Yang Gao.
Speaker 3: some of your filming efforts. This was first supported by Deep
Speaker 3: Thank you.
Speaker 3: QI ZHAN CHAN MING GONG NANG
Speaker 3: shall notoxyabey told include as acrylic shown This is also I consider that a
Speaker 3: chinda yo to tanker wo a who doingink saw you ching a routting home beaten down nearback in the stship fugio hobby teating her cooding sawid teating facing a Walker COO, whats the jog got seeing me Singapore hawker Bo when death.
Speaker 2: In Hong Kong, we continue to promote our products among the population age over 35 through offline workshops and campaigns as well as targeted online ads.
Speaker 2: In the past quarter, people over 35 contributed over 50% of our new paying clients in Hong Kong. We will further roll out offline events and refine product offerings to reach and serve this population.
Speaker 2: In the US market, we saw an improvement in client quality as the first month's average net asset inflow of view paying clients increased by approximately 40% sequentially.
Speaker 2: Client acquisition in Singapore remained resilient in the fourth quarter, mainly attributable to continued client interest in money market and fixed income fund products.
Speaker 3: dont att when we down bendar, when wr' down by vises an D uls the Chang by chici unbe when we down to out U kple gunle to town theassanja EY G challenging the June routine.
Speaker 3: Jie zi jie bu mo, long zi
Speaker 3: Residents should be minde the transparency protection time too managed images RedialWorks Protestant
Speaker 2: Total client assets increased by 2% year over year and 13% quarter over quarter to $417 billion HKD. The sequential increase was largely due to market appreciation of our client's Hong Kong stock holdings and robust net asset inflow across all regions.
Speaker 2: As of quarter-end, margin financing and securities lending balance declined by 10% sequentially. While we saw an uptick in securities lending balance amid market volatility, margin financing balance declined as clients unwound some of their positions during hard-con market rebound.
Speaker 3: and the international government. We are committed to the development of the international government. We are committed to the development of the international government.
Speaker 3: By the way, thank you for watching the video.
Speaker 2: The total trading volume is a flat quarter over quarter at 1.1 trillion HKD, of which Hong Kong stock trading constituted 36%. In the fourth quarter, Hong Kong stock trading volume increased by 31% potentially to 397 billion HKD. The increase can be attributed to higher trading volume of China new economy companies.
Speaker 2: and leverage an inverse ETF, which clients use as tactical tools to make short-term bets on market trends.
Speaker 2: Our market shares in Hong Kong futures and options trading further climb to historic highs of 8% and 15% respectively. US stock trading volume was 675 billion HKD, down 10% sequentially amid market sell-offs with many US technology names.
Speaker 3: Type 1ne Thank you very much.
Speaker 3: one beitten by vindarsar D out time by rc gambe, that jacibed IA hobby diding. As you saw, the Co would singin like that in apo woman. 3, will something leadating couminate eating that anga, or which you a GA the Co who giuncan do, who chas vers ES ago jgoin campaign eand to cal who.
Speaker 3: Thank you for your attention.
Speaker 3: comah, smal peill don't go. thir is one in IG tyes young down the sore valuence or high.
Speaker 3: apell as the tgo Curt is 1, indiging Ty young on the So Valence of shoing, he on the food djum people.
Speaker 3: Thank you for your attention.
Speaker 2: Total client assets involve management through 68% EO of a year and 22% quarter over quarter to 32 billion Hong Kong dollars, mainly driven by sustained interest in money market funds and interest rate hikes.
Speaker 2: We onboarded commodity funds and alternative funds in Singapore. In Hong Kong, we expanded equity and index-linked structured product offerings for high-network clients on either different risk-return objectives during market turmoil.
Speaker 2: In the fourth quarter, we also became the first retail platform in Hong Kong to distribute the BGF China Innovation Fund at BlackRock, thereby enhancing the brand awareness of Food2Money+.
Speaker 3: Thank you for your attention.
Speaker 3: Thank you very much for your attention.
Speaker 3: Thank you for your attention.
Speaker 3: Thank you for your attention.
Speaker 3: So early in R on IA gungoes on going to zone your arba data and the MB should to by E B. she's on your ARB endia, So you T know what thatnext year four can B. that is what you do, maching the port base well more more, you thought, raising the what she Co could you only subjectated on thatour enterprise business have 333 IPO distribution and IR client.
Speaker 2: as well as 638 ESOP clients of 41% and 60% year over year respectively.
Speaker 2: We acted as join-book runners for several high-profile Hong Kong IPOs, including those of 360Digitech and WeilongDelicious.
Speaker 2: We underwrote 41 Hong Kong IPOs in 2022 and ranked first among all brokers, according to WIMP.
Speaker 2: Of all 28 companies listed in 2022 with market cap over 10 billion UGAM dollars by the end of the year, 23 companies have used one or more of our enterprise product offerings. In the fourth quarter, we also launched Moomoo ESOP in Singapore to provide corporate clients with ESOP solution services.
Speaker 2: companies listed in 2022 with market cap over 10 billion Hong Kong dollars by the end of the year, 23 companies have used one or more of our enterprise product offerings. In the fourth quarter, we also launched Moomoo ESOP in Singapore to provide corporate clients with ESOP solution services.
Speaker 3: Thank you for watching.
Speaker 2: Next, I'd like to invite our CFO author to discuss our financial performance.
Speaker 4: Thank you, Li-wen and Daniel. Before going through our financial performance, I'd like to give you an update on our latest share repurchase program announced on March 11, 2022. At the end of last year, we have repurchased an aggregate of $8 million ADS with approximately $250 million US total repurchase amount in the open market transaction.
Speaker 4: This constitutes about 50% of the maximum purchase amount of 500 million US approved under our share repurchase program.
Speaker 4: Now, please allow me to walk you through our financial performance in the fourth quarter. All numbers are in Hong Kong dollars unless otherwise noted.
Speaker 4: Total revenue was 2.3 billion, up 42% from 1.6 billion in the fourth quarter of 2021. Despite market volatility, we end 2022 with full year revenue growing 7% to 7.6 billion.
Speaker 4: The voltage commission and handling charge income was 1 billion, increase of 22% year-over-year, and 10% qubit-qubit. The increase was mainly driven by a higher blended commission rate of 9.6 basis points. The commission per share pricing model for US stock trading led to a further hike in thebal stocked price.
Speaker 4: and the number of the shares trade increased.
Speaker 4: Interest income was 1.1 billion, an increase of 84% year-over-year and 29% year-over-year.
Speaker 4: The increase was mainly driven by higher interest income from cash deposit due to higher benchmark interest rate, which more than offset by the lower margin financing income due to lower daily average margin financing balance.
Speaker 4: The increase was mainly driven by higher interest income from cash deposit due to higher benchmark interest rate, which more than offset by the lower margin financing income due to lower daily average margin financing balance. Other income was 94 million down 20.
Speaker 4: of $42 million, an increase of 58% from $217 million in the fourth quarter of 2021. Bulkage commission and handling charge expenses were 64 million, down 27% year-over-year and 23% Q-over-Q. Expenses didn't move in line with $2.5 million in the second quarter of 2021.
Speaker 4: Our brokerage commission and handling charge income mainly due to cost saving from our US self-clearing business. Interest incomes was 182 million, up 227% year over year, and 307% Q over Q. The year over year and Q over Q increase was mainly driven by higher interest expenses associated with our security lending business.
Speaker 4: Processing and servicing costs were 96 million of 31% year-over-year and 6% Q-over-Q. The year-over-year increase was due to higher data transmission fee and system upgrade fees.
Speaker 4: As a result, our total gross profit was $1.9 billion, an increase of 40% from $1.4 billion in the fourth quarter of 2021. Gross margin was 85% as compared to 86% in the fourth quarter of 2021.
Speaker 4: Operating expenses were down 1% year-over-year and up 7% Q-over-Q to $818 million.
Speaker 4: To break it down, R&D expenses were 334 million up 24% year over year and 7% Q over Q.
Speaker 4: The increase, the year over year increase was mainly due to increase in R&D headcounts. We continue to support new product offering, investing in the US sale clearing capabilities and customized products for international markets.
Speaker 4: Working into 2023, we intend to further grow our headcount by middle to high team on top of our 2,800 employees at the end of last year to support expansion into new international markets. The market expenses were 153 million.
Speaker 4: down 55% year over year and 35% year over year. Extenses declined due to slower client acquisition amid weak market sentiment and the lower client acquisition costs. Gen expenses were $330 million of 52% year over year and 56% year over year. The rise was primarily due to increasing headcount for general administrative personnel and the growth of the company's business. The company's growth was mainly due to increasing headcount for general administrative personnel and the lower client acquisition costs. Gen expenses were $330 million of 52% year over year over year and 56% year over year. Gen expenses were $330 million of 52% year over year.
Speaker 4: and to a less extent, an increase in professional fees relating to our proposed Hong Kong IPO listing. As a result, our net income increased by 92% year-over-year and 27% Q-over-Q to 959 million. Net income margin expanded to 42% in the fourth quarter as compared to 31% in the second quarter.
Speaker 5: Thank you. We will now begin the question and answer session. If you have any questions, press star 1 in your telephone and wait for your name to be met.
Speaker 5: To withdraw your questions, please press star 11 again. Please stand by while we compile the Q&A roster. Once again, that's star 11 for questions.
Speaker 5: Our first question comes from the line of Hanh Pu from CICC. Please ask your question, Hanh.
Speaker 6: But a how like something nothing in ship per hand B I say go to the go that it sug have TE Med would you there your younger and su deliver and should how three go to your Sing or then other but she should have thousand that ating you so.
Speaker 6: Thank you very much for taking the question and congrats on another strong quarter. I have two questions. First, how about the latest progress in the new market such as Australia and Japan, for example the user profile.
Speaker 6: in the fourth quarter of the wealth management business and also the user penetration to our brokerage business. Thanks. James Paul
Speaker 3: The California Empire, on expanding our Crystal Belt incarceration and the development of Looks-Over
Speaker 3: As you can see, the Chinese government has a very strong relationship with the Chinese government. We are very grateful for the support of the Chinese government. We are very grateful for the support of the Chinese government. We are very grateful
Speaker 3: solitu is own champion in the orwcurrent Ally being shaped. Would she that I on the injjoge it?
Speaker 2: In Q4, we can spend time on various client acquisition channels in the Australian market, reduce the budget for inefficient client acquisition channels, and constantly optimize the account opening funnel. And by deepening connection with clients via online and offline exchanges, we also improved client's product experience.
Speaker 2: As a result, the client acquisition cost in Q4 in Australia fell substantially on a QoQ basis.
Speaker 2: In the future, we will continue to improve our product capabilities and the ability to efficiently acquire clients as well as upgrade our marketing strategies. Thank you.
Speaker 7: So, that's it for today. Thank you very much.
Speaker 7: So after data you can see laughing empty and too empty, which is you The model is a problem to know who they put home function power k Stro Per sneeze by he done changes and Allison on the you read Russianliners with machine
Speaker 7: Thank you for your attention.
Speaker 7: No don't in time. At the synon search coten media that to put the tiig: you is with that. Sing your post child.
Speaker 7: The person was always Investigation just like you of the last five.
Speaker 7: dont how the man to play your Ho her gaousing ch? Ind Pages with O? But that Singapore, what not going chaampion to Chang, Sunday one chap, when I tell job you deftily cidans to her, her P see tid to her the shaning BR to book courach from itar ampionjhate or coteact CHA.
Speaker 2: Thank you. Wealth management business maintain strong growth momentum in the fourth quarter, mainly because low risk fund products remain attractive to our clients during the rate hike cycle. And meanwhile, we have been broadening fund offerings to meet the investment and financial needs of customers with disabilities.
Speaker 2: brought by fun products has also been growing. That's especially true in the Singapore market. And looking ahead, we see a lot of room for growth in wealth management business, and we plan to continuously diversify structured products in Hong Kong, with an aim to provide five types of notes including
Speaker 2: fixed dividend structured products and fund link notes in the first half of this year. To better meet the asset allocation needs of professional investors and high net worth clients. And in Singapore, we have comprehensive mutual fund product offerings, and we'll focus on introducing more low-risk fund portfolios and dividend payments.
Speaker 5: This question comes from the line of Chih-Yau Huang from Morgan Stanley . Please ask your question, Chih-Yau.
Speaker 7: Hi, Kwan Yisang, Kashi-e Kyo-tik, T1-2-2-1. We are now in the D-E-G-S-2-1-2-2-1 kind of security broker to commission real-house. One video is about the D-E-G-S-2-1-2-1. We are now in the D-E-G-S-2-1-2-1-2-1.
Speaker 7: If secgive them and the in so and target turned out and the brokerage So the Gu is community some much ARS. Are that because some else should in brokerage coming here is some what P could's you, that's you go another they are going. This question cannot security easy.
Speaker 2: My first question is on the driver for higher brokerage commission rating fourth quarter and roughly what's the contribution from the derivative product and how's the management's outlook on the brokerage commission rating to 2023? And my second question is on the interest income, which we are seeing a rapid growth
Speaker 4: Thank you, I will take these two questions. Number one, in terms of the commission rate, I think the hike was mainly driven by our typical reasons because the market was quite volatile in fourth quarter. The US stock markets make meaningful corrections, which implies our price.
Speaker 4: effective pricing model become much higher. The other reason is, as you mentioned, these derivative trading continues to increase in the fourth quarter given the market volatility, which also has a positive benefit on our planned commission rate.
Speaker 4: In terms of the contribution in fourth quarter, the relative commissions roughly account for one-third of our total commission, maintaining a relatively high level in our history. But as I mentioned in last earnings call, we do not set any specific targets.
Speaker 4: for our derivative products. Instead, what we focus will be more on the investment education side and also further enhance our products itself. For instance, this year we'll gradually roll out our US option portfolio order functions.
Speaker 4: to attract more of these professional derivative traders.
Speaker 4: We are not inclined to push or hard sell these products to these clients with low risk appetite.
Speaker 4: The second question regarding the interest income.
Speaker 4: It is very difficult to quantify how much idle cash we can utilize, but it depends on the market volatility. But I can give you some general range. Say, in our history, the idle cash percentage-wise accounts for roughly 20 to 10 numbers, which are not growing.
Speaker 4: I think looking forward this year, the interest income will continue to grow on a year-on-year basis, mainly benefiting from the high interest rate environment.
Speaker 4: And for the deployment usage, actually we do not have a lot of choice. The reason is, according to the SFC regulations, we can only put clients' idle cash into the bank deposits, to the commercial banks, with a duration less than six months.
Speaker 4: For the deployment usage, actually, we do not have a lot of choice. The reason is, according to the SFC regulations, we can only put clients' idle cash into the bank deposits to the commercial banks with the duration less than six months. Thank you.
Speaker 5: Thank you. Our next question comes from the line of Cindy Wong from China Renaissance. Please ask your question, Cindy.
Speaker 6: Thank you for pointing this out. Out Lumpora Lorraine. Yes, we are dis tweaked in this funding session via Q and A that interview and yes, we get all your thoughts as a member of this community. But as always, we Susan importantly abouttle that officer gives a Nieely hypothetical example of a
Speaker 6: final woman can die. But you will see it to the single cost to okay, like to make it a constant, simple. Not the other $10 a coin reward and then the focus on the alternative to the quarter change from one to your side down and goes to either person, mam gen
Speaker 6: Copy today, central shock woman fake Idol what she bet she envy good-erionanna China I'm quite sure. So thanks for giving me the chance to ask.
Speaker 6: US client acquisition strategy in fourth quarter to help the new asset info increase? Do you have any expectation in terms of net asset info and the number of new payment client contributions in US in 2023?
Speaker 6: So the second question is related to customer acquisition costs. From fourth quarter, the CAC was actually down 11% quarter of a quarter. Can they continue the recent decline there? And if this trend will be sustained in first quarter of 2023, and how do we see the fall year? Thank you.
Speaker 4: Thank you. I will take your second question first. I leave the first question to Lee to answer. For the CAC in the fourth quarter, actually, we further optimize our channel distributions in Hong Kong and also in overseas markets. We adjust …
Speaker 4: certain incentives to our clients on a dynamic basis, not only just focus on the speed of our client, but also more importantly on the quality of our clients. Going forward, I think it is still very difficult to predict 2023 situations. I think our base case.
Speaker 4: will be the CAC largely will be, you know, the same as 2020 2022.
Speaker 3: Please, from mythrough my Solidprises, the China justinder, I 8 optimizations on ahé News back in thefree world towards theonson Amb monal
Speaker 3: sincethen way to thank Co oders. So you have Co D team losing when be your B and ST O ication joing well woman. So Don copos, ES have the what you been here, hean down a tring and easy to D what may is went to Jan and go ja. That in M are threeam bochyou centers, which is then gaa. The engence have been.
Speaker 3: Her youngang. Not well, I high WA FAM. What's the you two sym Ha him be he may go, don't go her make we and samping by cloing to to who and's someang when at him ING L she isn't that found. The is something to me comes away.
Speaker 3: They are not additional businesses.
Speaker 4: Client acquisition in the US in Q4 slowed down on a sequential basis. On one hand, market sentiment remained weak, which affected clients' willingness to enter the market. On the other hand, we deliberately slowed down client acquisition to focus on improving client quality. As mentioned, the first month average net as an employer from our new paying clients in the US.
Speaker 2: increased by around 40%, mainly because we focused on attracting client assets and adjusted the reward threshold. And in the first quarter this year, we already launched multi-lag options for US docs and we plan to add and improve advanced derivative products and functions such as index options this year. And going forward, we'll continue to enhance our product capabilities.
Speaker 2: and gradually improve our product portfolio centered on US stocks and US derivatives to enhance our competitiveness in the local market while also controlling client acquisition cost and focusing on improving client quality. And regarding the guidance, we now have no guidance for the US clients or asset-employer growth in 2023. Thank you.
Speaker 7: Our next question comes from Frank Zhen from Creditvis. Please ask your question, Frank.
Speaker 7: Yeah you know carit also show and the producerci are putting the AR I outin and handendon cning on shia.
Speaker 7: This is Frank Chen from Credit Suisse. I have two questions. The first one is on new market entries. What is the latest progress and the timetable? Is the services in Japan already online? The second question is related to interest rate.
Speaker 7: Fourth quarter interest expense surged quarter on quarter. And we would like to understand in general when interest rate is in an up cycle, would the interest rate spread of margin financing to Chris's lending business be affected, considering that the fee rate income is relatively fixed.
Speaker 4: but fewer expenses could elevate. Thank you. Thank you very much, Frank. I will take both of your questions. Number one, in terms of the new market expansion, I think you're right. We do have some new markets in our pipelines.
Speaker 4: In the base case, we are looking forward to expand two new markets, both in Asia this year. I think in terms of total addressable market forces, two potential markets will be very meaningful. But in terms of the exact timeline, it is still very difficult to predict nowadays, given we are still waiting for the regulators.
Speaker 4: confirmations for our license approval. Hopefully we will give you some update, more colors in the coming quarters.
Speaker 4: Second, regarding the interest expenses, I think theoretically speaking, the spread will be narrowed a little bit given that our pricing strategy on the margin financing is fixed rate. But on the funding call side, it will be impact.
Speaker 4: from the high interest rate environment. But thanks to our US self-clearing capabilities and also our very strong balance sheet, if you look at our total equity base, you can see actually a lot of margin financing, but the funding sort came from our own money.
Speaker 4: So therefore, I think the pressures from the funding costs are still manageable in 2023. Thank you.
Speaker 5: Thank you. Our next question comes from Leon T. from Daiwa. Please ask your question, Leon.
Speaker 5: Thank you. Our next question comes from Leon T. from Daiwa. Please ask your question, Leon.
Speaker 7: He does it on a pretty good level duringSo it's the way that we prepare to prepare ourselves after their
Speaker 7: I try to tell them what is more dangerous or what inspires their mood. And what mad we hear, depending on the baseline of what is in the display, even if it is witching shit,ared 22 Wassup today and an election might come so difficult. But I like be honest, the mayors of the state-of-the planes or government Deputy Mayor Andrei or the illusion that state officials warm at this time and that all of them are running
Speaker 7: This is from Thanks for taking my questions. Two questions today. is regarding Hong Kong business. We noticed that recently FUTU has been
Speaker 7: carrying out more and more offline services. Appreciate it for management can give us any color. How should we think about our offline business strategy in Hong Kong? Does it help us in terms of increasing the customer wallet share in AUM?
Speaker 7: And second question is regarding your latest plans for Hong Kong listing. Thank you very much.
Speaker 4: Thank you very much, Liu. I will take your second question first, and I will leave the first question to answer. There are no any confirmed timelines for our Hong Kong IPO listing nowadays. I think the top priority for
Speaker 4: management this year is to fully cooperate and collaborate with the Mainland regulators to complete our inspection as soon as possible.
Speaker 4: This is our top priority and we will further assess the feasibility of our Hong Kong IPO listing later, depending on the market conditions and also depending on our use of proceeds. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
Speaker 3: Food with that aning ching N long does notice the jor ching God. So you my year go, she four H geting's out. You both coutching a futual number four kers on ING the coing young be the long and ching the B? Il am T just be de that Jo ority awakens, huh. So you on that younger.
Speaker 3: She AED on at the outdoor the change cu who go me and the me the gold home. So could? You saw that. And to per coaching in the. You get her she and old woman H a Jo have from work. Change or don't. jata, you K? I out door foundances audience that to get gender and MU got caching, try to. She got hawker and stolow. C ch IA.
Speaker 2: So in Hong Kong, SUTU has higher penetration rate among the younger generations than the middle-aged groups, and we hope to better serve the middle-aged groups of clients. And compared with the younger generations on our platform, we see that the middle-aged groups are generally less tech-savvy and have longer conversion cycles. As such, we carried out offline account opening services in Hong Kong as face-to-face communication as well.
Speaker 2: can shorten the conversion cycle of these clients. And we also plan to reach potential clients through multiple touchpoints, including offline campaigns, cooperation with KLL, et cetera, so as to improve the quantity and the quality of the clients acquired. Thank you.
Speaker 5: As a reminder, to ask a question, please press star 11 on your telephone. Our next question comes from the line of Catherine Lay from JP Morgan. Please ask your question, Catherine. If you packages submitted show up at just after noon we would like to ask all citizens
Speaker 7: Oh, sorry, sorry. This is Peter asking question on behalf of Catherine. Oh, what the deal went, he sure you sure you sure you sure you sure you sure you sure you can. Then you'll go John you could do you can watch finish on the chocolatier announcement.
Speaker 8: there's a CRRC announcement on tightening of the offshore brokers.
Speaker 8: And we wish to understand what's the impact on FUTU's business operation, in particular, FUTU's see any kind of AU and outflow following the CSRC announcement last December . Thank you.
Speaker 4: Thank you, Peter. Let me answer your question. First of all, give you some general curlers about our clients movement following the end of last year's news flow. We do witness some of our Hong Kong clients.
Because there are some sentiment concerns, there are some client outflows, particularly in the first half of January . I think the overall amount is quite manageable. Roughly I think the net outflow at the time accounts for roughly 1 to 2% of our total client assets.
which compared with the situation we faced at the end of 2021, we think the situation was manageable. The net outflow condition of the situation gradually reversed starting from February . And nowadays we record daily what has been the interlock.
Secondly, regarding the CSRC's news at the end of last year, I think number one is we fully accept the regulator's point of view. We have a full cooperation.
with the regulators. On a net basis, we do think it will be healthy for the industry's long-term growth. And also, if you follow the news, there are some clarities from the CSRC's spokesperson in the middle of February , mentioning how to deal with COVID-19.
the existing clients, they ask for an orderly deal with the existing clients. It will be an industry-wide situation. So we will take very constructive manner to cooperate with the regulators in this regard. Thank you very much.
Thank you very much for all your questions and now turn the conference back to Daniel for closing remarks. Thank you operator. That concludes our call today. On behalf of the Food Food Management team, I would like to thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our investor relations representatives.
Thank you and goodbye. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.
I have you.
The.
Hello ladies and gentlemen, welcome to Food2Holdings fourth quarter and full year 2020 earnings conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session.
Today's conference call is being recorded. If you have any objections, you may disconnect at this time. And now I'd like to turn the conference over to your host for today's conference call, Daniel Yuan, Chief of Staff to CEO and Head of IRF, WU2. Please go ahead, sir.
Thanks, operator. And thank you for joining us today to discuss our fourth quarter and full year 2022 earnings results. Joining me on the call today are Mr. Lee Flee, Chairman and Chief Executive Officer, Arthur Chen, Chief Financial Officer, and Robin Chu, Senior Vice President.
As a reminder, today's call may include forward-looking statements, which represent the company's belief regarding future events, which by their nature are not certain and are outside of the company's control. Forward-looking statements involving hearing risks and uncertainties. We caution you that a number of important factors could cause back-to-results to differ materially from those containing any forward-looking statements. For more information about the potential risks and uncertainties, please visit www.cpe.rutgers.gov.
please refer to the company's filings with the FCC, including its registration statement. So with that, I will now turn the call over to Lee. Lee will make his comments in Chinese, and I will translate. Hello, everyone. I am Lee Hing from the Chinese Ministry of Finance. I am the director of the Chinese Ministry of Finance. Hello, everyone. I am Lee Hing from the Chinese Ministry of Finance.
When J? O chambberan was is and asperher syri hobandan was I also and hand and Susan uters and handard posicition. He also often cheapstr on the is banginia Co, which is us O a inia hawker, sudo vway.
Thank you for your attention.
The familiar y tankoku D do AR year EBA, which an homeom be done down by vindara earling R Indian.
chena woman hodoars Ho artist the valual to tankau being an to threeing gultural bapandarsship, jing an you CY and drink outingin our areaia. Woman curok with a pinguy to udios new parts that ened the joshia by son So T and tanks En woman tamping to GA the kaning.
Thank you all for joining our earnings call today. In the fourth quarter, we added over 42,000 paying clients, down 27% sequentially. Stock markets plummeted in the first half of the quarter, and the certainty around the sustainability of market rebound in the second half affected user sentiment, which led to the disvaluation of client acquisition.
Our total paying clients reached around 1.5 million, representing 20% growth every year.
In 2022, we managed to add over 240,000 paying claims, exceeding our full year guidance by 20%. Despite a challenging market backdrop, our average quarterly client retention rate in 2022 remained above 98%, which speaks to the stickiness of our product. Thank you.
I would like to thank the Chinese government for their support and for their support in the development of the Chinese nuclear system. Thank you very much. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
More change and thquake clat. We want for the eficians on Chang EAS a seeing tens on the cching Fu. You do tens Sun inching conci. Let talk about happens should the SC, the tankero? For we ple do change for the.
Ks hand in gona's aran house sudah her food. laka who stamic WAL woman. Grandfather, ER OD's an also seen chinda y tanker. oha who doingink saw y aching routing when be En down near pan ership fugio. pobvis ING her cooding saw teing basing ja Walker who abouts the job seeing me.
In Hong Kong, we continue to promote our product among the population age over 35 through offline workshops and campaigns, as well as targeted online ads. In the past quarter, people over 35 contributed over 50% of our new paying clients in Hong Kong. We will further roll out offline events and refine product offerings to reach and serve this population. We will drive Infiniti danced backORG CDC ploy for emotional skills in global positive Week Next Katie grant and decades more contribution classes.
In the US market, we saw an improvement in client quality of the first month's average net asset inflow of U-Pay clients increased by approximately 40% sequentially. Client acquisition in Singapore remained resilient in the fourth quarter, mainly attributable to continued client interest in money market and fixed income fund products.
Don time home. Reason down by endar. Why reason down by vanishes stand D's the changing by ch? donbe. Why reason down out the? U curb gungle So town the sanja is eeres to changallenging the genune routine.
The total client assets increased by 2% over year and 13% quarter
we saw an uptick in securities lending balance amid market volatility. Margin financing balance declined as clients unwound some of their positions during hard call market rebound.
So jor long way IR given E gambi can be given. shiing chzong, gangu Julian am be away by in essrially LO. This is D to gangu juli an can B is done, done by an esscentially gado sanion, Joe xici gama.
We hope that we can give you a good understanding of the future of ETA. We hope that you will continue to be a part of the future of the ETA. We hope that you will continue to be part of the future of the ETA. We hope you will continue to be part of the future of the ETA. We hope that you will continue to be part of the future of the ETA.
The global trading volume is flattish quarter over quarter at 1.1 trillion HKD, of which Hong Kong stock trading constituted 36%.
In the fourth quarter, Hong Kong stock trading volume increased by 31% potentially to $397 billion HKD. The increase can be attributed to higher trading volume of China new economy companies and leverage an inverse ETF, which clients used as tactical tools to make short-term bets on market trends.
Our market shares in Hong Kong futures and options trading further climbed to historic highs of 8% and 15% respectively. US stock trading volume was 675 billion HKD, down 10% sequentially amid market sell-off of many US technology names.
one bitten down by V AR dada. Stand by rc canambe that jacti bating J hobby diding. So you saw the Co OD Sing like thatin apo. Or place somethingk leading colimate eating that angga or J you a gagi the Co chuncon. Do call vers huago jgoan canambe eand to calhothat phone number. japort on the function. And so you MO on.
Thank you very much. Please enjoy the rest of the session. Please continue to watch the video and watch the previous videos. Please continue to watch the previous videos. Please continue to watch the previous videos. Please continue to watch the previous videos.
Total client assets involve management through 68% EO per year and 22% quarter over quarter to 32 billion Hong Kong dollars, mainly driven by sustained interest in money market funds amid interest rate hikes. We onboarded commodity funds and alternative funds in Singapore. In Hong Kong, we expanded equity and index linked structure product offerings.
Gi fuyto one next year for your stand by SR centia. Ipo of offnshe IR coouple is go by scentra bjia. You saw a couple.
homban B jendana by an the cityi herbamandthe leadordship. That is the digdo womanio aliian. She ambo granevvan chanua total isin ianger IPO. She zonbgo sandu olda suk her way long.
We are all that super- I've gave in your earnings but Honey, it's away
To the past day, with!LAR, we would like to thank William Darby, co-founder of VCsong horrors, and many other leaders for Bridge sneakerallow business. Thank you so much. Please like and subscribe. Thank you for watching.
Our enterprise business has 333 IPO distribution in IR clients as well as 638 ESOP clients of 41% and 60% year over year respectively. We acted as joint book runners for several high-profile Hong Kong IPOs, including those of 360 Digitech and Weilong Delicious. We underwrote 41 Hong Kong IPOs in 2022 and ranked first among all brokers, according to WENT.
Of all 28 companies listed in 2022 with market cap over 10 billion Hong Kong dollars by the end of the year, 23 companies have used one or more of our enterprise product offerings. In the fourth quarter, we also launched Moomoo Aesop in Singapore to provide corporate clients with Aesop solution services. Thank you for your attention.
Next, I'd like to invite our CFO author to discuss our financial performance. Thank you, Li-Wen Daniel. Before going through our financial performance, I'd like to give you an update on our latest share repurchase program announced on March 11, 2022. At the end of last year, we have repurchased an aggregate of 8 million ADS.
with approximately $250 million US total repurchase amount in the open market transaction. This constitutes about 50% of the maximum purchase amount of $500 million US approved under our share repurchase program. Now, please allow me to walk you through our financial performance in the fourth quarter. All numbers are in Hong Kong dollars unless otherwise noted.
Total revenue was $2.3 billion, up 42% from $1.6 billion in the fourth quarter of 2021. Despite market volatility, we end 2022 with full year revenue growing 7% to $7.6 billion. Vulcage commission and handling charge income was $1 billion, increase of 22% year-over-year and 10% Q over Q.
The increase was mainly driven by a higher blended commission rate of 9.6 basis points. The commission per share pricing model for US stock trading led to a further hike in the stocks, Yun yes that their fund.
Interest income was 1.1 billion, an increase of 84% year-over-year and 29% Q-over-Q. The increase was mainly driven by higher interest income from cash deposit due to higher benchmark interest rate, which more than offset by the lower margin financing income due to lower daily average margin financing balance.
Other income was $94 million down 20. The Chinese Treasury Billion, JanuarytoKim B is subject totheelle also dealing with non-Refochemistry coincidence. There are 4 changes available at the inter-odes
and handling charge income may lead you to cost saving from our US self-clearing business.
Interest income was 182 million, up 227% year over year, and 307% Q over Q. The year over year and Q over Q increase was mainly driven by higher interest expenses associated with our security lending business. Processing and servicing costs were 96 million, up 31% year over year, and 6% Q over Q. The year over year increase was due to higher data transmission fee and system upgrade fees.
As a result, our total gross profit was $1.9 billion, an increase of 40% from $1.4 billion in the fourth quarter of 2021. Gross margin was 85% as compared to 86% in the fourth quarter of 2021. Operating expenses were down 1% year-over-year and up 7% Q over Q to $818 million.
To break it down, R&D expenses were $334 million, up 24% year-over-year, and 7% year-over-year. The increase, the year-over-year increase was mainly due to increase in R&D headcounts as we continue to support new product offering, investing in the U.S. sale clearing capabilities, and customized products for international markets.
Working into 2023, we intend to further grow our headcount by middle to high team on top of our 2,800 employees at the end of last year to support expansion into new international markets. Selling and marketing expenses was 153 million, down 55% year over year, and 35% Q over Q. Extenses declined due to slower client acquisition amid the current policy growth Rather than risky material supply, deep iron Teresa has announced that the week before the=" 3- signalling he made an appearance in O bats
weak market sentiment, and the lower client acquisition costs. GN expenses were 330 million of 52% year over year and 56% year over year. The rise was primarily due to an increase in headcount for general administrative personnel and to a less extent an increase in professional fees relating to our proposed Hong Kong IPO listing. As a result, our net income increased by 92% year over year and 27% Q by Q to 959 million. Net income margin expanded to 42% in the fourth quarter as compared to 31% in the same quarter last year.
we compile the Q&A roster. Once again, that's Star 11 for questions.
Our first question comes from the line of Hanh Pu from CICC. Please ask your question, Hanh.
But a how I something, nothing in sho per hand B I said go to looking. They also that it sug. How TE negative would you there, your younger and su de you should. How all to I go to your Sing, or then AR, and then she should have thousand are eightating CLO.
This is Han from SCC. Thanks very much for taking my question and congrats on another strong quarter. I have two questions. First, how about the latest progress in the new market such as Australia and Japan, for example the user profile and the product and service offering.
to our brokerage business. Thanks.
In also they can get him going out. Do you all every done may City. You do woman there all do is sound conil that I cookat should AU toldtal jum bealer.
I want to now begin by saying no. Thank you very much.
If we look after this scenario and determine whether there is some endosome reg Conservation Government- hue Dead Like Being here will diverse data on the inch stop Thank you.
In Q4, we can spend time from various client acquisition channels in the Australian market, reduce the budget for inefficient client acquisition channels, and constantly optimize the account opening funnel. And by deepening connection with clients via online and offline exchanges, we also improved the client's product experience.
So as a result, the client acquisition cost in Q4 in Australia fell substantially on a QoQ basis. And in the future, we'll continue to improve our product capabilities and the ability to efficiently acquire clients as well as upgrade our marketing strategy. Thank you. Thank you.
Coaching into the totally high she show. But you her secure the. Should you like her, have one year she, she coveverher her her, she search her the yly dush two life for the heart. She also have a one in search her gr. Turn out who chaml, like you, cover the turn gy. No, don't T that like Ed.
For both our shaking pots and Please refer to the t UX section if needed placebo. strictly classified. website is free format Jason in a bit in the future.
The day Singapore women are going to change in China one shot where I can't you Joe you different into her pashy he didn't want to show him being to put on to heart and to only all could I can some of you but you go hard and kingdom Walta management business maintain strong growth momentum in the fourth quarter mainly because low risk fun products remain attractive to our clients during the rate hike cycle......
product has also been growing. That's especially true in the Singapore market. And looking ahead, we see a lot of room for growth in wealth management business, and we plan to continuously diversify structured products in Hong Kong, with an aim to provide five types of notes, including fixed dividend structured products and fund linked notes in the first half of this year, to better meet the allocation needs of professional investors and high net worth clients.
In Singapore, we have comprehensive mutual fund product offerings and we will focus on introducing more low-risk fund portfolios and dividend paying fund portfolios while gradually expanding other product categories including bonds, private equity funds, structured notes, etc. Thank you.
Our next question comes from the line of Chih-Yau Huang from Morgan Stanley . Please ask your question Chih-Yau.
Our next question comes from the line of Chih-Yau Huang from Morgan Stanley . Please ask your question, Chih-Yau. Hi. My name is Chih-Yau Huang.
You take the way 1, the eag qu kind of secuity. The broker commission has one V O you be end you got you doing so. It is a secu them and out and the broker show the is of town. arnings are Ping ker coming here, RA some, what another pping.
They are going to going cannot security easy to you know if you are than Chan ING, some direct then twent cohion, some dire other to that P the cohision and you have to know years understand cohision.
And my second question is on the interest income, which we are seeing a rapid growth in the fourth quarter. And so basically, I'm wondering, how's our plan to utilize the client idle cash and what we invest and what's the percentage and the scale of client idle cash that we plan to utilize in 2023? Thank you. Okay.
Thank you, I will take these two questions. Number one, in terms of the commission rate, I think the hike was mainly driven by our typical reasons because the market was quite volatile in fourth quarter. The US stock markets make meaningful corrections, which implies our effective pricing model become much higher. The other reason is, as you mentioned, these derivative trading...
continue to increase in the fourth quarter, given the market volatility, which also has a positive benefit on our blended commission rate. And in terms of the contribution in the fourth quarter, the relative commissions roughly account for one third of our total commission, maintaining a relatively high level in our history. But as I mentioned in last Ealing-Hou, we do not set any specific targets.
for our derivative products. Instead, what we focus will be more on the investment education side and also further enhance our products itself. For instance, this year we'll gradually roll out our US option portfolio order functions to attract more professional derivative products.
traders and we are not inclined to push or hard sell these products to these clients with low risk appetite. The second question regarding the interest income.
It is very difficult to quantify how much idle cash we can utilize, but depends on the market volatility. But I can give you some general range. Say, in our history, the idle cash percentage-wise accounts for roughly 20% to 10% of our total client assets, different markets, different market conditions. For instance,
In the fourth quarter or even in the whole last year, because the market was not very good, actually our clients' idle cash position percentage-wise, it was relatively higher. I think looking forward this year, the interest income will continue to grow on a year-on-year basis, mainly benefiting from the high interest rate environment. And for the deployment usage, actually we do not have a lot of choice.
The reason is, according to the SFC regulations, we can only put clients' idle cash into the bank deposits to the commercial banks with a duration of less than six months. Thank you. Thank you. Our next question comes from the line of Cindy Wang from China Renaissance. Please ask your question, Cindy. Hi. Is there a historical example of marketers trying to meet date of their break-in regains DC so far? So our Laird is Sofia epitomicallyating all Drag racing cars andgressions on the roads of the school. times above ground Tabaged car buses timing shared skyline on-handidis Ernest
In the afplidated himself. Now cannot only ign of a final woman can either loing it to do the Sing Co clear life to may go the con. Ship your to only exam one paper in the shoman CHA, not the other something. Dollars going to woman's the Coker tem.
Here's an anotherity to porate terms on to your sat down. Or she a percent. Now creadd hadus show woman say. Question that is, should do the show IC focus she the how on today fact down now woman and young, she do andt D the tre day hookker temper now on C phone here with the twent y.
So thanks, Manchin, for giving me the chance to ask questions. So I have two questions. First question is related to the US market. So in fourth quarter, the average net asset info of new PE clients for their first month of onboarding increased by 40% quarter over quarter.
So what's the US client acquisition strategy in fourth quarter to help the new asset inflow increase? And do you have any expectation in terms of the net asset inflow and the number of new paying client contribution in US in 2023? So the second question is related to customer acquisition costs.
From fourth quarter, the CAC was actually down 11% quarter over quarter. Can I thank you for the reasoning decided? And if this trend will be sustained in first quarter of 2023, and how do we see the fall year? Thank you.
Thank you. I will take your second question first. I leave the first question to Lee to answer. For the CAC in the fourth quarter, actually, we further optimize our channel distributions in Hong Kong and also in overseas markets. We adjust certain incentives to our clients on a dynamic basis.
not only just focus on the speed of our client, but also more importantly on the quality of our clients. Going forward, I think it is still very difficult to predict 2,023 situations. I think our base case will be the CAC largely will be the same as…
A five- insists on a focus will go to your problem function if I mean a RA Wh Thank you very much.
So for you two sythen the me way you to hand Co oders. So you have cool genin Gene losing qu be yourwn back in the social O electration jooring Mae woman. So don't Co odes, have the PO ch been Chair Char a young woman.
You've put together someSeason 1 interviews down below. I invited overBC, in 247 terms of the openinglace of the Name of the Don't look away
Cle B could the hooker from, says you when look Co, which on the Gene efficiitionclient acquisition in the U's in Q4 slowdown on a sequential basis. On one hand, market sentiment remain weak which affect the client's will in us to enter the market. You, the other hand, we deliberately slow down client acquisition to focus on improving client quality and, as mentioned, the first month average net as an of our view, paint.
and gradually improve our product portfolio centered on US stocks and US derivatives to enhance our competitiveness in the local market while also controlling client acquisition costs and focusing on improving client quality. And regarding the guidance, we now have no guidance for the US clients or asset and flow growth in 2023. Thank you. Our next question comes from Frank.
ch from credit SP. Please ask your question Frank. ok, I say quitered, what you want to was ration that, joha. Well, you are going to people go, you qu? You see the hunting ruda tweeting facing the issue. teer, who should T be your moing? They want to go through that. You ve been a full civil eating shoong here.
Now they are going. hydrogenes and the living some one the only cannot also do seachures who will be out? Other struunctction in J, how some innational hotown would see her supercation in IA in a corridor show run the producerciities of putting the R? Tier routin a tremman cing struction.
This is Frank Chen from Credit Suisse. I have two questions. The first one is on new market entries. What is the latest progress and the timetable? Is the services in Japan already online? The second question is related to interest rate. Fourth quarter interest expense surged quarter on quarter. And we would like to understand in general when interest rate is in an up cycle, is it
Would the interest rate spread of margin financing to Chris's lending business be affected, considering that the fee rate income is relatively fixed, but the fee rate expenses could elevate? Thank you very much, Frank. I will take both of your questions. Number one, in terms of the new market expansion, I think you're right, we do have some new markets in our pipelines.
In the base case, we are looking forward to expand two new markets. Both are in Asia this year. I think in terms of total addressable market forces, two potential markets will be very meaningful. But in terms of the exact timeline, it is still very difficult to predict nowadays, given we are still waiting for the regulators' confirmations for our license approval. Hopefully, we will give you some updates, more colors in the coming quarters.
Second, regarding the interest expenses, I think theoretically speaking, the spread will be narrowed a little bit given that our pricing strategy on the margin financing is fixed rate. But on the funding call side, it will be impact from the high interest rate environment. But thanks to our US self-clearing capabilities and also our very strong balance sheet.
If you look at our total equity base, you can see actually a lot of margin financing the funding source came from our own money. So therefore, I think the pressures from the funding costs are still manageable in 2023. Thank you.
Thank you. Our next question comes from Leon T. from Daiwa. Please ask your question, Leon.
speak in Mandarin and ChineseCU. QV neighbors on the phone, welcome to the chat. Can you give your fairly detailed answers before we end? Yeah, that's please. excellent question as well. Do you want to raise your hands for the ladies to loud all? Hold on, wait a minute, what are your thoughts on this? Okay, I especially do this source from correct goddamn broke my voice oh well. We do hear my voice.
or the vide will be should genes or-.
This is Li-Yang Qi from Daiwa, thanks for taking my questions, two questions today. Firstly is regarding Hong Kong business, we noticed that recently FUTU has been carrying out more and more offline services.
plans for Hong Kong listing. Thank you very much.
Thank you very much, Liu. I will take your second question first and I will leave the first question to leave to answer. There are no any confirmed timelines for our Hong Kong IPO listing nowadays. I think the top priority for the management this year is to fully cooperate.
and collaborate with the Mainland regulators to complete our inspection as soon as possible. This is our top priority and we will further assess the feasibility of our Hong Kong IPO listing later, depending on the market conditions and also depending on our use of proceeds. Thank you.
NFL is the newest cosmetic brand named Fort Harris discolored and parent-child. Everyone's implies that even 328 states have promote HR inmate
So in Hong Kong, SUTU has higher penetration rate among the younger generations than the middle-aged groups, and we hope to better serve the middle-aged groups of clients. And compared with the younger generations on our platform, we see that the middle-aged
acquired. Thank you. Thank you. As a reminder to ask a question please press star 1 1 on your telephone. Next question comes from the line of Catherine Le from JP Morgan. Please ask your question Catherine. Oh sorry this is Peter.
Put the in house, you should be sure to say it to your milk handle your here to think of the old fool you can work who and Joe can wash your team to form and Daniel. Uh, so let me do the translation. So we understood that there's a announcement on.
on tightening of the offshore brokers. And we wish to understand what's the impact on FUTU's business operation in particular. Do FUTUs see any kind of AUN outflow following the CSRC announcement last December ? Thank you. Thank you, Peter. Let me answer your question.
First of all, give you some general colors about our clients movement following the end of last year's news flow. We do witness some of our Hong Kong clients because there are some sentiment concerns. There are some client outflows, particularly in the first half of January .
I think the overall amount is quite manageable. Roughly, I think the net outflow at the time accounts for roughly 1-2% of our total client assets, which compared with the situation we faced at the end of 2021, we think the situation was manageable. The net outflow condition the situation.
gradually reversed starting from February and nowadays we record daily from half the intro. Secondly, regarding the CSRC's news at the end of last year, I think number one is we fully accept the regulators point of view and we have a full cooperation with the regulators. On a net basis, we do think it will be healthy for the industry's long-term growth.
we will take very constructive manners to cooperate with the regulators in this regard. Thank you very much.
Thank you. Once again, to ask a question, please press Star 1-1 on your telephone.
All right, I'm showing no further questions. Thank you very much for all your questions. I'll now turn the conference back to Daniel for closing remarks. Thank you, operator. That concludes our call today.
On behalf of the food to management team, I would like to thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our investor relations representative. Thank you and goodbye.
This concludes today's conference call. Thank you for participating. You may now disconnect.