The stock price of Futu Holdings (NASDAQ: FUTU) has increased by over 12.9% in the pre-market.
The major news that comes adjacent to this positive stock movement is Futu Holdings (FUTU) has released its unaudited Fourth Quarter and Full Year 2020’s fiscal results.
Largest (digital) brokerage in China
Futu Holdings Limited is a brokerage firm, and its headquarters are based in Hong Kong. This brokerage platform is online, and access to this brokerage is accessible through the internet-device. The Futu firm is gaining massive success in China and is considered a leader in its overseas security brokerage market.
Being a brokerage firm that is leaning towards the technology sector, Futu Holdings is making the right move of investing heavily in the research and development(R&D) of its technology as well as in analytical tools through which it also serves the role of market-news/data provider on its online platform, for the investors.
Since the Pandemic started, the stimulus packages, reduced interest rates, and physical business restrictions had made way for the online platforms to be at the center-stage of businesses. This had the same lucrative opportunities and avenues opened for the brokerage market where the investors and consumers’ attention focused on an online-brokerage firm like Futu Holdings (NASDAQ: FUTU).
FUTU Akin to Robin Hood
The performance and execution of its core trade and deep-research business operations createa revenue through margin financing. It provides wealth management and investing services specifically for stock markets in the USA, Hong Kong, and China. Futu is also infamously considered the Robin Hood equivalent in China since the Chinese Government’s declaration of change in international trade relations and outlook.
How does China’s international trade outlook benefit FUTU?
China is opening up its trade barriers and expanding its trade relations to attract hot foreign money into its Current Account. However, the Chinese citizens are still subjected to a quota for annual foreign exchange of max $50,000. This simply means that the Chinese Government is limiting how much money flows out of the country (capital outflow).
Fourth-quarter financials and outlook of FUTU fundamentals
The third quarterly report indicated that FUTU had been consecutively beating its revenue estimates for four previous consecutive quarters, especially since it became Public stock in March 2019. Before releasing the fourth-quarter financial results, it already had positive expectations and strong market sentiment due to the solid backing of the FUTU’s fundamental’s performance.
Explicitly covering the Fourth Quarter, FUTU highlighted that its total revenues had increased from 281.6% Y-O-Y to US$153 million. The total gross profit increased 321% Y-O-Y to US$121.8 million. The net income was up 11.1 times year-over-year to US$68.7 million.
Similarly, for the Full year 2020, FUTU highlighted that the total revenues increased by 211.9% Y-O-Y to US$427 million. Total gross profit increased 253% Y-O-Y to US$337.3 million. The net income increased by over 699% Y-O-Y to US$171 million.
The CEO of Futu Holdings (FUTU) stated that they had added more than 98,000 paying clients on a net-basis and adding a total of 320,000 paying clients in 2020. The total client asset reached HK$285.2 billion, representing more than 227% growth on a Y-O-Y basis while 41.9% growth every quarter.
FUTU’s CFO indicated that in the fourth quarter, a significant financial investment firm purchased about 50 million Class A ordinary shares of the company in the form of prepaid warrants for an aggregated sum of US$260 million. This will be fruitful for FUTU’s current year’s capital financing balance; for investing in technological infrastructure and global marketing efforts, essentially improving the operational fundamentals for the year 2021.
