富途控股 (FUTU) 2019 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to Futu Holdings Limited's second-quarter 2019 earnings conference call. (Operator Instructions). Please be advised that today's conference is being recorded. I would like to hand the conference over to your first speaker today, Mr. Daniel Yuan, Chief of Staff of Futu. Thank you, please go ahead.

女士們，先生們，感謝您的支持，歡迎來到富途控股有限公司 2019 年第二季度財報電話會議。（操作員說明）。請注意，今天的會議正在錄製中。我想把今天的會議交給您的第一位發言人，富途參謀長Daniel Yuan先生。謝謝，請繼續。

Thank you, operator. And thank you for joining us today to discuss our second-quarter 2019 results. Joining me on the call today are Leaf Li, our Chairman and CEO; Arthur Chen, CFO and Robin Xu, VP.

謝謝你，運營商。感謝您今天加入我們討論我們 2019 年第二季度的業績。今天和我一起參加電話會議的是我們的董事長兼首席執行官 Leaf Li；首席財務官 Arthur Chen 和副總裁 Robin Xu。

As a reminder, today's call may include forward-looking statements which represent the Company's belief regarding future events, which by nature are not certain and can be affected by factors outside of the Company's control. These statements are based on current plans, estimates and projections and you should not place undue reliance on them.

提醒一下，今天的電話會議可能包括前瞻性陳述，代表公司對未來事件的看法，這些事件本質上是不確定的，可能會受到公司無法控制的因素的影響。這些陳述基於當前的計劃、估計和預測，您不應過分依賴它們。

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 contained in any forward-looking statements. For more information about the potential risks and uncertainties, please refer to the Company's filings with the SEC, including its registration statement.

前瞻性陳述涉及固有的風險和不確定性。我們提醒您，許多重要因素可能導致實際結果與任何前瞻性陳述中包含的結果大不相同。有關潛在風險和不確定性的更多信息，請參閱公司向美國證券交易委員會提交的文件，包括其註冊聲明。

So, with that, I will now turn the call over to Leaf Li. Leaf will make his comments in Chinese and I will translate.

因此，有了這個，我現在將把電話轉給 Leaf Li。Leaf 將用中文發表評論，我將進行翻譯。

(Interpreted) Hello, everyone. Thank you for joining us today. I'm pleased to report another strong quarter despite ongoing market volatility. On the client side we added over 16,000 net new paying clients during the past quarter and the total number of paying clients hit 165,000, representing 65% year-over-year growth. A large part of this growth was driven (technical difficulty) Hong Kong business.

（翻譯）大家好。感謝您今天加入我們。儘管市場持續波動，但我很高興地報告另一個強勁的季度。在客戶端方面，我們在上個季度淨新增付費客戶超過 16,000 名，付費客戶總數達到 165,000 名，同比增長 65%。這一增長的很大一部分是由（技術難度）香港業務推動的。

Despite the adverse effects of recent political events on our online and off-line marketing efforts in Hong Kong, we were still able to increase brand awareness and achieve 115% year-over-year growth in the number of paying clients in Hong Kong. We will continue to leverage our experience in penetrating the Hong Kong market, which was our first target market outside of Mainland China to expand globally.

儘管最近的政治事件對我們在香港的線上和線下營銷工作產生了不利影響，但我們仍然能夠提高品牌知名度，並在香港的付費客戶數量實現了 115% 的同比增長。我們將繼續利用我們在滲透香港市場方面的經驗，這是我們在中國大陸以外向全球擴張的第一個目標市場。

As we mentioned on our last earnings call, the number of paying clients, client retention rates and total client assets are the three metrics that we attach most importance to. As our paying client numbers continue to demonstrate strong growth momentum, we are also pleased to have retained 98.1% of them on a quarterly basis, which is the highest retention rate that we have seen since 2018.

正如我們在上次財報電話會議上提到的，付費客戶數量、客戶保留率和客戶總資產是我們最重視的三個指標。隨著我們的付費客戶數量繼續呈現強勁的增長勢頭，我們也很高興每季度保留了 98.1%，這是我們自 2018 年以來的最高保留率。

At the same time, we saw net asset inflows of HKD5.7 billion. Despite the market volatility, our clients clearly continue to entrust us with more and more of their assets.

與此同時，我們看到淨資產流入 57 億港元。儘管市場波動，但我們的客戶顯然繼續將越來越多的資產委託給我們。

In May, we officially launched Money Plus, a money market mutual fund distribution platform, in Hong Kong. This marked our initial foray into the wealth management business. Early results indicate that Money Plus has been effective in helping us attract new assets, which, as I mentioned, is a key metric for our business.

5 月，我們在香港正式推出貨幣市場互惠基金分銷平台 Money Plus。這標誌著我們首次涉足財富管理業務。早期結果表明，Money Plus 有效地幫助我們吸引了新資產，正如我提到的，這是我們業務的一個關鍵指標。

Since the end of the second quarter we have also started to offer a number of fixed income and equity funds to clients in both Mainland China and Hong Kong. Going forward wealth management will be an integral part of our business. Through our proprietary trading infrastructure and superior user experience, we have already attracted a rapidly growing group of young, active and affluent millennials to our platform.

自第二季度末以來，我們還開始向中國大陸和香港的客戶提供一些固定收益和股票基金。未來，財富管理將成為我們業務不可或缺的一部分。通過我們專有的交易基礎設施和卓越的用戶體驗，我們已經吸引了快速增長的年輕、活躍和富裕的千禧一代群體到我們的平台。

Notably, our average client age is 35. Yet their average asset balance at the end of the second quarter was around HKD415,000, which is a much higher level than our peers in the region. In the end, we believe clients are our biggest asset. In that regard, our trading services have laid a solid foundation for our wealth management business.

值得注意的是，我們的平均客戶年齡為 35 歲。然而，他們在第二季度末的平均資產餘額約為 415,000 港元，遠高於區內同業。最後，我們相信客戶是我們最大的資產。在這方面，我們的交易服務為我們的財富管理業務奠定了堅實的基礎。

As our clients accumulate more wealth, become more financially sophisticated, and as we gain a deeper understanding of them, we want to cater to their broader wealth management needs. And for this we are starting with mutual fund investments.

隨著我們的客戶積累更多財富，在財務上變得更加成熟，隨著我們對他們的了解越來越深入，我們希望滿足他們更廣泛的財富管理需求。為此，我們從共同基金投資開始。

Like we did for our trading and margin financing services, we will surround our wealth management products with news, research and powerful analytical tools, providing our clients with a data rich foundation to simplify their investing decision-making process. We want to empower our clients with thoughtful investor education.

就像我們為交易和保證金融資服務所做的那樣，我們將圍繞我們的財富管理產品提供新聞、研究和強大的分析工具，為我們的客戶提供豐富的數據基礎，以簡化他們的投資決策過程。我們希望為我們的客戶提供深思熟慮的投資者教育。

We are still experimenting with our wealth management business, but in time we believe that it can help expand our client acquisition capabilities, increase average assets per client, improve client retention, and provide a more stable stream of revenue.

我們仍在試驗我們的財富管理業務，但我們相信它可以及時幫助擴大我們的客戶獲取能力，增加每個客戶的平均資產，提高客戶保留率，並提供更穩定的收入來源。

Now I'd like to provide some updates about our technology investments and enterprise service. In June, we became the first Chinese broker to offer full market-depth for US option quotes. With quote refresh rates that are much faster than our peers in the region, we have and will continue to invest in technology to bring this best-in-class trading experience to individual investors.

現在我想提供一些關於我們的技術投資和企業服務的更新。6 月，我們成為第一家為美國期權報價提供完整市場深度的中國經紀商。憑藉比我們在該地區的同行快得多的報價刷新率，我們已經並將繼續投資於技術，為個人投資者帶來一流的交易體驗。

Moving on to our enterprise business, we officially launched our new service brand I&E in May to integrate our ESOP solution and IPO subscription services. In the first half of 2019, we acquired 15 new ESOP clients. Among the new additions in the second quarter were Douyu, the recently IPO'd game streaming business, and a number of other leading Chinese new economy companies.

繼續我們的企業業務，我們於 5 月正式推出了新的服務品牌 I&E，以整合我們的 ESOP 解決方案和 IPO 認購服務。2019 年上半年，我們獲得了 15 個新的 ESOP 客戶。第二季度新增的公司包括最近首次公開募股的遊戲流媒體業務鬥魚，以及其他一些領先的中國新經濟公司。

Our ESOP business has successfully handled some of the most complicated ESOP systems for a variety of Chinese tech companies. And we continue to differentiate ourselves with both the quantity and quality of our clients in this area. Moreover, our ESOP solutions have proven to be a consistent client acquisition channel for our Mainland China business.

我們的 ESOP 業務已成功為多家中國科技公司處理了一些最複雜的 ESOP 系統。我們將繼續憑藉該領域客戶的數量和質量使自己脫穎而出。此外，事實證明，我們的 ESOP 解決方案是我們中國大陸業務的穩定客戶獲取渠道。

And finally, on August 12, we announced the appointment of General Atlantic to our Board. We believe GA's extensive experience investing in technology platforms in the region will benefit us as we further build our platform and deliver long-term value to shareholders. So, with that, I will now turn the call over to Arthur to discuss our financial performance.

最後，在 8 月 12 日，我們宣布任命 General Atlantic 為我們的董事會成員。我們相信 GA 在該地區投資技術平台的豐富經驗將使我們受益，因為我們將進一步建設我們的平台並為股東創造長期價值。因此，有了這個，我現在將把電話轉給亞瑟來討論我們的財務業績。

Thanks, Leaf and Daniel. We concluded the second quarter with total revenue of HKD260 million, a 40% year-over-year and a 10% Q-on-Q increase. We consider this reasonable growth against the backdrop of the broader market volatility. Let me walk you through the key financial details for this quarter.

謝謝，利夫和丹尼爾。我們第二季度的總收入為 2.6 億港元，同比增長 40%，環比增長 10%。我們認為這種合理增長是在大盤波動的背景下進行的。讓我向您介紹本季度的主要財務細節。

Brokerage commission and handling charge income was HKD122 million, an increase of 36% from the same period in 2018. Quarterly growth was a moderate 7%. Total trading volume came down a little bit due to a weak equity market, yet our effective take rate went up due to the expirations of promotion discounts. Brokerage commission and handling charge income contributed to about 47% of our total revenue in the past quarter.

經紀佣金及手續費收入為1.22億港元，較2018年同期增長36%。季度增長率為 7%。由於股市疲軟，總交易量略有下降，但由於促銷折扣到期，我們的有效成交率有所上升。過去一個季度，經紀佣金和手續費收入占我們總收入的 47% 左右。

Interest income was HKD114 million, an increase of 31% year-over-year and 6% Q-on-Q. The rise was primarily due to the increase in the balance of the client deposits and improved returns of such balances due to enhanced capital management as well as higher benchmark interest rates in the US and Hong Kong.

利息收入為港幣 1.14 億元，按年增加 31%，按季增加 6%。上升主要由於客戶存款結餘增加及該等結餘因加強資本管理及較高的美國及香港基準利率而改善的回報所致。

Our margin financing and secured lending balance dipped by 1% on a yearly basis but went up 7% Q-on-Q. Interest income contributed to about 44% of our total revenues. Other income was HKD24 million. The 159% year-over-year growth was mainly attributed to our growing enterprise service business. This contributed the remaining 9% of our total revenue.

我們的保證金融資和擔保貸款餘額同比下降 1%，但環比增長 7%。利息收入占我們總收入的 44% 左右。其他收入為港幣2,400萬元。159% 的同比增長主要歸功於我們不斷增長的企業服務業務。這貢獻了我們總收入的剩餘 9%。

On the cost side, total cost was HKD64 million, an increase of 6% year-over-year and 4% Q-on-Q. Brokerage commission and handling charge expenses were HKD24 million, an increase of 21% year-over-year and 16% Q-on-Q, which was roughly in line with our brokerage commission income growth.

成本方面，總成本為6,400萬港元，同比增長6%，環比增長4%。經紀佣金和手續費支出為 2400 萬港元，同比增長 21%，環比增長 16%，與我們的經紀佣金收入增長大致一致。

Interest expenses decreased 21% year-over-year to HKD19 billion, and the processing and servicing cost increased 26% on higher market information and the data fees including cloud service fees as well. As a result, we recorded total gross profit of HKD196 million, an increase of 56% year-over-year and 12% Q-on-Q, which translates to a gross margin close to 76%, which was a record high.

利息支出同比減少 21% 至 190 億港元，處理和服務成本增加 26%，原因是市場信息和數據費用（包括雲服務費用）增加。因此，我們錄得總毛利 1.96 億港元，同比增長 56%，環比增長 12%，毛利率接近 76%，創歷史新高。

In terms of operating expenses, total expenses were HKD145 million, an increase of 67% year-over-year and 28% Q-on-Q. Breaking down our operating costs, research and development expenses were HKD64 million, up 83% over last year and 19% from last quarter. The rise was mainly due to the continued increase in headcount for our R&D functions where we have been hiring most aggressively.

經營開支方面，總開支為1.45億港元，同比增長67%，環比增長28%。細分營運成本，研發費用為港幣 6,400 萬元，較去年增加 83%，較上季增加 19%。這一增長主要是由於我們一直在最積極招聘的研發部門的員工人數持續增加。

As of quarter end, R&D personnel account for about 74% of our total employees. Technology creates the biggest entry barrier for our business in our view and we will likely continue to attract the talents as we expand our trading products and branch out into new business such as wealth management.

截至季度末，研發人員約占我們員工總數的 74%。我們認為技術為我們的業務創造了最大的進入壁壘，隨著我們擴展交易產品並涉足財富管理等新業務，我們可能會繼續吸引人才。

Selling and marketing expenses was HKD42 million, an increase of 46% year-over-year and 33% Q-on-Q. The rise was primarily due to higher branding and marketing spending, particularly in relation to our new Money Plus business. Our marketing in Hong Kong has turned out to be quite effective, resulting in 115% year-over-year growth in terms of the number of new paying clients acquired in Hong Kong.

銷售及營銷費用為 4,200 萬港元，同比增長 46%，環比增長 33%。增長主要是由於品牌和營銷支出增加，特別是與我們新的 Money Plus 業務有關。事實證明，我們在香港的營銷非常有效，在香港獲得的新付費客戶數量同比增長了 115%。

G&A expenses was HKD39 million, an increase of 68%. The rise was primarily due to the increase in headcount for general and administrative personnel. At quarter end our total headcount reached 688, a roughly 65% increase from one year ago. As a result, our pretax income was HKD48.2 million, up 30% from last year and also down 21% from last quarter.

一般及行政開支為港幣 3,900 萬元，增加 68%。這一增長主要是由於一般和行政人員人數的增加。在本季度末，我們的總員工人數達到 688 人，比一年前增加了大約 65%。因此，我們的稅前收入為 4,820 萬港元，比去年增加 30%，也比上一季度減少 21%。

Net income increased by 129% year-over-year to HKD55 million due to additional tax allowance for our -- and expenses from local tax bureaus. And as we mentioned on our first earnings call, we continue to expect our full-year effective tax rate will be below 20%. Non-GAAP adjusted income increased by 122% to HKD59 million.

淨收入同比增長 129% 至 5500 萬港元，這是由於我們的額外稅收減免和地方稅務局的支出。正如我們在第一次財報電話會議上提到的那樣，我們繼續預計全年有效稅率將低於 20%。非美國通用會計準則調整後收入增加 122% 至 5,900 萬港元。

That concludes our prepared remarks. We'd now like to open the call to questions. Operator, please go ahead.

我們準備好的發言到此結束。我們現在想開始提問。接線員，請繼續。

(Operator Instructions). Weicheng Tang, Goldman Sachs.

（操作員說明）。唐偉成，高盛。

I've got two questions, one is regarding wealth management. As Leaf just introduced, you have been starting to sell not only mutual -- money market funds but also some fixed income or other maybe equity mutual funds to investors.

我有兩個問題，一個是關於財富管理的。正如 Leaf 剛剛介紹的那樣，你不僅開始向投資者出售共同基金——貨幣市場基金，還開始出售一些固定收益或其他可能是股票的共同基金。

We would like to -- if management could give us an update in terms of the volume of funds has been sold since we rolled out the Money Plus product in May. And also the average fee on those products. And also, if you have some balance, existing outstanding balance of those funds that have been sold to investors.

我們希望 - 如果管理層可以向我們提供自我們 5 月份推出 Money Plus 產品以來已售出資金量的最新信息。還有這些產品的平均費用。而且，如果您有一些餘額，即已出售給投資者的那些基金的現有未償餘額。

And the second one is related to the recent Hong Kong situation. I think a lot of investors would be worrying about how this heated situation in Hong Kong will impact our operation. Can management give some quantitative measures or metrics to let us know like since June how our client asset grows or the trading velocity as well as marketing campaign or all of those business activities has been impacted by this situation in Hong Kong. Thank you.

第二個是關於最近的香港局勢。我認為很多投資者會擔心香港的這種激烈局勢將如何影響我們的運營。管理層能否提供一些量化措施或指標，讓我們知道自 6 月以來我們的客戶資產如何增長或交易速度以及營銷活動或所有這些業務活動是否受到香港這種情況的影響。謝謝。

For number one about our mutual fund product, actually we just launched money market funds in the second quarter. At the end of the second quarter our balance for the money market fund is close to HKD1 billion. And just recently, actually last week, we further enriched our funded portfolios.

關於我們的共同基金產品，第一，實際上我們剛剛在第二季度推出了貨幣市場基金。第二季度末，我們的貨幣市場基金餘額接近10億港元。就在最近，實際上是上週，我們進一步豐富了我們的投資組合。

In connection with the money market funds we also launched [quite several] fixed income products and also the equity product as well. You can actually see the breakdown of these funds in our NiuNiu platform as well.

在貨幣市場基金方面，我們還推出了 [相當多的] 固定收益產品以及股票產品。其實在我們牛牛平台也可以看到這些資金的明細。

I think in the third quarter we will do a lot of new marketing campaigns in order to promote our new service offerings. But having said that, I think the more important thing is we try to leverage our technology to give more deep and more widely education to our users.

我認為在第三季度，我們將開展大量新的營銷活動，以推廣我們的新服務產品。但話雖如此，我認為更重要的是我們試圖利用我們的技術為我們的用戶提供更深入、更廣泛的教育。

In particular, now our users and customers attaching to our platforms have limited knowledge about these new products such as the fund. This is, I think, the areas we will pay special attention in this quarter.

特別是現在我們的用戶和依附於我們平台的客戶對基金等這些新產品的了解有限。我認為，這是我們在本季度將特別關注的領域。

And for the recent Hong Kong social events, I think as you imagine or if you have already witnessed, it creates a lot of the market volatility alongside with the recent Sino-US trade wars, which I think actually on our side we welcome the market volatility, which we think it will accelerate market consolidations and the long-term. As a leading player in the space, we actually will be better off in such market consolidations.

對於最近的香港社會事件，我認為正如你所想像的或者你已經看到的那樣，它與最近的中美貿易戰一起造成了很大的市場波動，我認為實際上我們這邊歡迎市場波動，我們認為這將加速市場整合和長期。作為該領域的領先者，我們實際上會在這種市場整合中變得更好。

So, in terms of financial impact, I think for the revenue and also for the cost side, so far, we think the situation is quite manageable. Having said that, I think the negative impact mainly relies on the new kinds of acquisitions, particularly in Hong Kong. Because of the recent event, we also intentionally delayed certain of our marketing campaigns because we think -- even we put a lot of marketing campaigns nowadays, it may not turn out to be a very effective channel or effective solution to acquire new clients.

因此，就財務影響而言，我認為對於收入和成本方面，到目前為止，我們認為情況是可以控制的。話雖如此，我認為負面影響主要取決於新型收購，尤其是在香港。由於最近發生的事件，我們還故意推遲了某些營銷活動，因為我們認為 - 即使我們現在開展了大量營銷活動，它也可能不是獲得新客戶的非常有效的渠道或有效的解決方案。

Thank you. Can I follow up on a question regarding the mutual funds? We're not allowed to open the account on your platform. So, can you give us some more information regarding -- I actually saw on your [research] channel that you officially launched, I don't know how to call it, like fund plus or (spoken in Chinese). So, how many funds and particularly what type of funds are listed on this platform? And is it open to -- like Leaf I think said is it open to all Hong Kong and Mainland investors?

謝謝。我可以跟進有關共同基金的問題嗎？我們不允許在您的平台上開設帳戶。那麼，你能不能給我們更多的信息——我實際上在你的 [研究] 頻道上看到你正式啟動了，我不知道怎麼稱呼它，比如 fund plus 或（用中文說）。那麼，這個平台上掛了多少只基金，特別是什麼類型的基金呢？它是否開放——就像 Leaf 我想說的那樣，它對所有香港和大陸投資者開放嗎？

Sure. In terms of the coverage, I think in the second quarter we are more focused or tailored to the Hong Kong based clients in terms of the Money Plus or money market funds. Actually we now expand the coverage to full of our existing clients; i.e., including the Mainland clients and also the Hong Kong clients as well.

當然。就覆蓋範圍而言，我認為在第二季度，我們在 Money Plus 或貨幣市場基金方面更加關注或針對香港客戶量身定制。實際上，我們現在將覆蓋範圍擴大到所有現有客戶；即包括內地客戶，也包括香港客戶。

And also, we will particularly enhance our features and functions so that even the financial service professionals, because you guys are not allowed to open a brokerage account -- trading brokerage account. I think it will be very likely for you to open just a fund account in our platform so that we can solve your constraints through our technology expertise.

而且，我們將特別增強我們的特性和功能，即使是金融服務專業人士，因為你們不允許開設經紀賬戶——交易經紀賬戶。我想你很有可能在我們的平台上只開一個資金賬戶，這樣我們就可以通過我們的技術專長來解決你的限制。

And in terms of the number of funds we launched, up to now we have already launched close to 10 products, including three to four fixed income products, four equity products and three to four mutual fund products. And I do expect the number of the funds we launched at the end of the third quarter were close to 20. [All the funds] nowadays are just [SFE] recognized products, so it can be offered to all retail clients.

而在我們推出的基金數量上，截至目前我們已經推出了近10個產品，包括三到四個固定收益產品、四個股票產品和三到四個共同基金產品。我確實預計我們在第三季度末推出的基金數量接近 20。[所有基金]現在只是[SFE]認可的產品，所以它可以提供給所有零售客戶。

And I just forgot to answer your question before in terms of fee structures, for the money market fund, actually we don't charge any subscription fees. But for the management fees charged by the fund management company we do have certain percentage to -- as a rebate. And for the fixed income products and also the equity products, on top of the management fee rebate, we also charge 0.8% one-time subscription fees in our platform as well.

剛才忘了回答你之前關於費用結構的問題，對於貨幣市場基金，實際上我們不收取任何訂閱費。但對於基金管理公司收取的管理費，我們確實有一定的比例——作為回扣。對於固定收益產品和權益產品，除了管理費返還外，我們還在我們的平台上收取0.8%的一次性認購費。

Okay, thanks. I will definitely try the fund accounts if we can on your platform.

好的謝謝。如果可以的話，我一定會在你們的平台上嘗試基金賬戶。

Yes, you should. Thank you.

是的你應該。謝謝。

Kelvin Chu, UBS.

瑞銀集團的朱凱文。

Congratulations again regarding the launch of the mutual fund distribution platform. Just a follow-up question on that. Can you remind us the key competitive advantages you see with your platform versus key competitors in Hong Kong, which I believe the sales of mutual funds are still mainly conducted by commercial banks now?

再次祝賀共同基金分銷平台的推出。只是一個後續問題。您能否提醒我們您的平台與香港主要競爭對手相比的主要競爭優勢，我相信共同基金的銷售目前仍主要由商業銀行進行？

The second question is longer-term would you consider launching margin trading solutions for mutual funds, [client] services offered by private banks?

第二個問題是長期的，你會考慮為共同基金推出保證金交易解決方案，私人銀行提供的[客戶]服務嗎？

And the third question regarding this platform, just want to get an update regarding any additional costs which you foresee after the launch of this platform? Or should there be plenty of cost synergy with the existing brokerage platform we have?

關於這個平台的第三個問題，只想了解有關您在該平台啟動後預見到的任何額外費用的最新信息？或者我們現有的經紀平台是否應該有大量的成本協同效應？

And then the other question is regarding client mix. I noticed that in the past few quarters Futu's client equity position has been, I would say comparing to your in-force customers, more skewed towards Hong Kong locals. So, plenty of new customers from Hong Kong locals, which contribution has risen to 30% now. I just want to have an idea from licensing on the long-term client breakdown that we should target between Hong Kong and Mainland Chinese. Thank you.

然後另一個問題是關於客戶組合。我注意到，在過去幾個季度，富途的客戶資產狀況，我想說的是，與您的有效客戶相比，更傾向於香港本地人。因此，大量來自香港本地人的新客戶，目前貢獻已上升至30%。我只是想從我們應該在香港和中國大陸之間針對長期客戶細分的許可中獲得一個想法。謝謝。

Thank you, Kelvin. Let me answer your questions. I think maybe I'll address your last question first given it's just purely a number question. In terms of the new clients we acquired in the second quarter, the breakdown is roughly 50% to 50% spreading over Mainland China and also in Hong Kong.

謝謝你，開爾文。讓我回答你的問題。我想也許我會先解決你的最後一個問題，因為它只是一個純粹的數字問題。就我們在第二季度獲得的新客戶而言，大約有 50% 至 50% 分佈在中國大陸和香港。

As we recall, in the first quarter -- the clients we acquired in the first quarter, 60% of them came from the Hong Kong local people and the remaining 40% came from China. I think in the long run the percentage of the Hong Kong paying clients will continue to go up as we think this year actually will be the first year for us to pay more attention about clients outside of mainland China.

我們記得，在第一季度——我們在第一季度獲得的客戶中，60% 來自香港本地人，其餘 40% 來自中國。我認為從長遠來看，香港付費客戶的比例將繼續上升，因為我們認為今年實際上將是我們更加關注中國大陸以外客戶的第一年。

For the money markets or for the fund distribution compare our platform with other commercial banks, we did some feasibility before we launched our products. I think the major pain points for the Hong Kong retail person nowadays, for them to buy the mutual funds through the commercial banks is, number one, the cost is still relatively high.

對於貨幣市場或基金分銷，將我們的平台與其他商業銀行進行比較，我們在推出產品之前做了一些可行性研究。我覺得現在香港散戶的主要痛點，他們通過商業銀行購買互惠基金，第一，成本還是比較高。

If you look at certain commercial banks such as HSBC, Citibank, etc., normally clients need to be charged 2% [subsequently] for the fixed income products and 3% for the equity products versus our charges is roughly 60% to 80% lower compared with their fee rate.

如果你看看某些商業銀行，如匯豐銀行、花旗銀行等，通常客戶需要為固定收益產品收取 2% [隨後] 的費用，為股票產品收取 3% 的費用，而我們的收費大約低 60% 至 80%與他們的費率相比。

And the second [leg] is the convenience, because when we plug in these money market fund products into their brokerage account, i.e. people can buy/still their stocks. At the same time, they can use the purchasing powers to subscribe the funds in a simultaneous manner.

第二個 [leg] 是方便，因為當我們將這些貨幣市場基金產品插入他們的經紀賬戶時，即人們可以購買/保留他們的股票。同時，他們可以利用購買力同步認購資金。

And also, we spend a lot of efforts in the mobile technology enhancement. So, in particular for this millennial generation, they are -- they can easily use our mobile phone APPs to use these transactions. And definitely in the long term we are considering to put more leverage or do the financings for these fund products as well. I think this is our long-term footprint in terms of our whole wealth management strategy as well.

而且，我們在移動技術增強方面付出了很多努力。所以，特別是對於這個千禧一代，他們可以很容易地使用我們的手機應用程序來使用這些交易。從長遠來看，我們肯定會考慮增加槓桿或為這些基金產品進行融資。我認為這也是我們整個財富管理戰略的長期足跡。

In terms of the cost, actually I think we don't have increase a lot of new marginal costs alongside this new business in terms of the system set up and also the product development, etc. So, going forward there will be definitely some marketing costs in connection with this fund distribution. But I think in terms of economic model and also the kind of retention and also the new assets these new addressable market people can bring in, these costs will be worthwhile. Thank you.

在成本方面，實際上我認為在系統設置和產品開發等方面，我們並沒有隨著這項新業務增加很多新的邊際成本。因此，未來肯定會有一些與此基金分配相關的營銷成本。但我認為，就經濟模式、留存率以及這些新的潛在市場人員可以帶來的新資產而言，這些成本是值得的。謝謝。

Just a follow-up with that, regarding the source of customers on the mutual fund distribution, will you foresee more of the potential customers would be your existing brokerage clients? Or would you think the launch of the mutual fund distribution platform would also help Futu to acquire a lot of new customers?

只是跟進，關於共同基金分銷的客戶來源，您是否會預見到更多的潛在客戶將是您現有的經紀客戶？或者您認為公募基金分銷平台的推出也會幫助富途獲得大量新客戶？

I think actually it will help in both manners. If we look at the numbers for the data in the second quarter for our Money Plus, the initial response of the clients to subscribe these money market funds all came from the existing clients, which I think it is also a natural situation given they have already connected with us, they have already assets in our accounts. So it is very convenient for them to buy these mutual fund products.

我認為實際上這對兩種方式都有幫助。如果我們看我們Money Plus第二季度的數據，客戶認購這些貨幣市場基金的最初反應都是來自現有客戶，我認為這也是很自然的情況，因為他們已經與我們有聯繫，他們已經在我們的賬戶中擁有資產。所以他們購買這些共同基金產品非常方便。

But I think after May, starting from June, we see more and more people, actually they are not actively trading in these stocks. But through our new products we attract a new type of people and also, more importantly, we attract new money, [all] sites, [our] universe. I.e., we did see a lot of new people, because of these new products, start to open the trading accounts, start to open the fund accounts in our platform and have started to put new money into our platform.

但我認為5月之後，從6月開始，我們看到越來越多的人，實際上他們並沒有積極地交易這些股票。但是通過我們的新產品，我們吸引了一種新型的人，更重要的是，我們吸引了新的資金、[所有]網站、[我們的]宇宙。也就是說，我們確實看到很多新人，因為這些新產品，開始在我們的平台上開設交易賬戶，開始開設基金賬戶，並開始向我們的平台投入新資金。

So, I think going forward this is also why we are so determined, and we are so convinced we will go through this direction because it will enlarge our addressable market and also it will attract new people with new money [growth].

所以，我認為這也是我們如此堅定的原因，我們非常相信我們會沿著這個方向前進，因為它會擴大我們的目標市場，也會用新的資金[增長]吸引新的人。

(Operator Instructions). [Livi Liu], HSBC.

（操作員說明）。[Livi Liu]，匯豐銀行。

I have three questions. One -- the first one is also about wealth management. So, where do we book our earnings for the wealth management in the P&L segment? Is it in the other income? And also for the fee structure, we can see that from our official website about our products in the fee structure there is 100% subscription fee for us and then a sharing mechanism with the fund companies to share about the annual management fee. So, based on our [ground] research it's usually 50% to 60% sharing to the distribution channel in Hong Kong. Are we following the same policy?

我有三個問題。一——第一個也是關於財富管理的。那麼，我們在損益板塊中的理財收益應該記在哪裡呢？是在其他收入裡嗎？還有收費結構，我們從官網看到我們的產品在收費結構上是100%的認購費，然後和基金公司有一個分成機制，分享每年的管理費。因此，根據我們的[地面]研究，通常有 50% 到 60% 的份額分配給香港的分銷渠道。我們是否遵循相同的政策？

And the second question is about margin financing. We can see that from the balance sheet we have over HKD3 billion balance of margin financing, but we only have less than HKD1 billion bank borrowings. So, where do we have the funding source to our margin financing business and what's the funding cost for this business?

第二個問題是關於保證金融資。我們從資產負債表可以看出，我們有超過30億港元的保證金融資結餘，但我們只有不到10億港元的銀行借款。那麼，我們的融資融券業務的資金來源在哪裡，融資成本是多少？

And my third question is about our management just said Hong Kong is the first stop of our internationalization. So, where or which cities will be the choices that we are considering for next stops? And is Melon one of our choices as the Melon market is also opening up for the brokerage licenses?

第三個問題是關於我們管理層剛才說香港是我們國際化的第一站。那麼，我們考慮下一站的選擇是哪里或哪些城市呢？Melon 市場也正在開放經紀牌照，Melon 是我們的選擇之一嗎？

Sure, for your three -- or maybe four questions, I will address the first three and the last question will be addressed by Leaf. In terms of the wealth management P&L impact, you are right. Currently the relevant revenue has been recorded in the other income items because we just launched money market funds in May. So, the P&L impact to the second quarter is still limited.

當然，對於你的三個——或者四個問題，我將解決前三個問題，最後一個問題將由 Leaf 解決。就財富管理損益影響而言，您是對的。目前相關收入已計入其他收入項目，因為我們5月份剛剛推出貨幣市場基金。因此，對第二季度的 P&L 影響仍然有限。

In terms of fee structure, you are also right. I cannot disclose the exact rebate numbers on the different mutual fund company, but I think your guesstimate, or the industry practice also applies to us as well.

在費用結構方面，你也是對的。我無法透露不同共同基金公司的確切回扣數字，但我認為您的猜測或行業慣例也適用於我們。

For the margin financings, our major funding source actually came from Hong Kong local banks. On average borrowing costs were in the range of [HIBOR] plus 120 basis points to 130 basis points plus. Besides the margin, besides the bank borrowing also we support our margin financing through our own capital since we finished our IPO in March. And Leaf will share with you about his thoughts about our further internationalization strategy.

對於保證金融資，我們的主要資金來源實際上來自香港本地銀行。平均借貸成本在 [HIBOR] 加 120 個基點至 130 個基點以上的範圍內。除了保證金，自從我們在 3 月份完成首次公開募股以來，除了銀行借款外，我們還通過自有資金支持我們的保證金融資。Leaf將與您分享他對我們進一步國際化戰略的看法。

(Interpreted) So, following Hong Kong the US will be our second destination for internationalization. So, in the US we have got all the relevant SEC and clearing licenses. And I'm not sure if you noticed, earlier this year we actually launched our US product called Futu NiuNiu and we are actively polishing those products and adding more features. And in the second half of this year you'll see a lot of new iterations of our Futu NiuNiu product.

(解讀) 那麼，美國將是繼香港之後，我們第二個國際化的目的地。因此，在美國，我們獲得了所有相關的 SEC 和清算許可證。我不確定你是否注意到，今年早些時候我們實際上推出了我們的美國產品 Futu NiuNiu，我們正在積極完善這些產品並添加更多功能。在今年下半年，你會看到富途牛牛產品的很多新迭代。

So, since we are still, as already mentioned, in a stage of developing our product, we haven't been marketing that aggressively. But you'll see a lot more marketing campaigns into the second half. So, NiuNiu will be the basis of our new iteration outside of China and Hong Kong.

因此，正如已經提到的那樣，由於我們仍處於開發產品的階段，因此我們沒有那麼積極地進行營銷。但是下半年你會看到更多的營銷活動。因此，NiuNiu 將成為我們在中國和香港以外的新迭代的基礎。

(Operator Instructions). Yiwen Zhang, Bank of China.

（操作員說明）。張一文，中國銀行。

I have a question regarding new paying client retention. So, [announced] the 15,000 new additions, can you break down for how much is organic and how much is related to the marketing campaign? And again on the marketing campaign, it's more expensive in Hong Kong than China. And how should we view the (inaudible) and marketing expense going forward? This is my first question.

我有一個關於新付費客戶保留的問題。那麼，[宣布] 15,000 項新增內容，你能分解一下有多少是有機的，有多少與營銷活動相關嗎？再次在營銷活動中，香港比中國貴。我們應該如何看待（聽不清）和營銷費用？這是我的第一個問題。

And a second (inaudible), I saw rapid growth in your (inaudible) revenue. In your prepared remarks you stated (inaudible) IPO [underwriting] and enterprise TR. Can you give us a size or (inaudible) of the IPO underwriting and enterprise TR? Thank you.

第二個（聽不清），我看到你們（聽不清）的收入快速增長。在您準備好的發言中，您陳述了（聽不清）IPO [承銷] 和企業 TR。您能否提供 IPO 承銷和企業 TR 的規模或（聽不清）？謝謝。

For two questions, number one, in terms of channels from the new clients acquired, similar to first quarter, the most part will come from the organic or word-of-mouth, which contributes over 65% of our total new paying clients acquired in this quarter. And also Hong Kong -- the online marketing and also the Hong Kong off-line market accounts for roughly close to 20% of our new paying clients acquired for this quarter.

對於兩個問題，第一，就獲得新客戶的渠道而言，與第一季度類似，大部分將來自有機或口碑，這占我們獲得的新付費客戶總數的 65% 以上這個季度。還有香港——在線營銷和香港線下市場約佔本季度新增付費客戶的近 20%。

Going forward, you are right, the marketing cost or equity cost for the Hong Kong clients is relatively high compared with that of Mainland. But I think from the unit economics, judging from these clients annual ARPU contribution and compared with our spending in terms of new clients acquired, it still makes sense for us to continue to spend money to acquire them in early manners.

展望未來，你是對的，與內地相比，香港客戶的營銷成本或股權成本相對較高。但我認為，從單位經濟學來看，從這些客戶每年的 ARPU 貢獻來看，並與我們在獲得新客戶方面的支出相比，我們繼續花錢以早期方式獲得它們仍然是有意義的。

Because if you can engage them in a much early situation, actually they will stick with our platform for even longer time. So, from a lifetime value perspective we do think acquiring price as early as possible is more critical compared with the current year's P&L impact.

因為如果你能在更早的情況下吸引他們，實際上他們會在我們的平台上堅持更長時間。因此，從終身價值的角度來看，我們確實認為與當年的損益影響相比，儘早收購價格更為關鍵。

In terms of the other revenues, you are right, mainly come from the ESOP contribution and also the IPO distribution. I think in terms of the -- proportion wise, IPO distribution accounts for an even bigger part versus over revenue. But I think the impact overall is still relatively limited given that the overall revenue just accounts for 9% of our total revenue.

就其他收入而言，你是對的，主要來自 ESOP 貢獻和 IPO 分配。我認為就比例而言，IPO 分配比收入佔更大的部分。但我認為整體影響仍然相對有限，因為整體收入僅占我們總收入的 9%。

(Operator Instructions). Weicheng Tang, Goldman Sachs.

（操作員說明）。唐偉成，高盛。

Just following up on two questions. One is can you give us an update of the product pipeline regarding the securities lending futures options -- when would they be rolled out, in like second half of 2019?

只是跟進兩個問題。一是您能否向我們介紹有關證券借貸期貨期權的產品線的最新情況——它們何時推出，比如 2019 年下半年？

The second is regarding the tax. We heard that you mentioned there's a tax rebate on R&D expense. We just want to find out is this rebate one-off based on the aggregate R&D you have spent? Or it would be -- is a constant tax rate cut following your R&D expense?

二是關於稅收。我們聽說您提到研發費用可以退稅。我們只是想知道這種返還是根據你們研發的總費用計算的一次性返還嗎？或者它會是 - 在您的研發費用之後是否會持續降低稅率？

The third question regarding the interest income -- sorry, interest expense. We found if we use -- I'm guessing the major expense -- entry expense, you -- corresponding to the liabilities of short-term borrowings and payable to brokers, maybe it's like (inaudible) brokers.

關於利息收入的第三個問題——對不起，利息支出。我們發現，如果我們使用 - 我猜是主要費用 - 入門費用，你 - 對應於短期借款和應付給經紀人的負債，也許它就像（聽不清）經紀人。

So, if we do the calculation, we found on a quarterly basis that average interest expense cost has went up a bit. We calculate it at around 3.9% in the first quarter and 4% in second quarter. So, do you think the cost will come down later on given you mentioned earlier that after listing your borrowings from banks actually it actually has a lower spread on HIBOR? Thanks.

因此，如果我們進行計算，我們發現每季度平均利息支出成本有所上升。我們計算第一季度約為 3.9%，第二季度約為 4%。那麼，鑑於您之前提到在列出您的銀行借款後，實際上它實際上與 HIBOR 的息差較低，您認為成本會在以後下降嗎？謝謝。

I leave the first question to my colleague, Robin Xu, who will answer you a little bit later in terms of new product pipelines to be launched in the second half of this year. Let me just address your second and third questions first.

第一個問題留給我的同事Robin Xu，稍後他會就今年下半年即將推出的新產品管線為大家解答。先回答你的第二個和第三個問題。

In terms of tax rebate, it is one-off on a quarterly basis, but it will be recurring items on a yearly basis. The thing is, according to the local Tax Bureau's treatments, they have -- in order to promote technology spending, they actually allow additional 40% to 50% of your annual expenses in terms of your deductions for your effective (technical difficulty) tax rate calculations.

在退稅方面，是每季度一次性，但每年都會是經常性的項目。問題是，根據當地稅務局的處理，他們有——為了促進技術支出，他們實際上允許額外 40% 到 50% 的年度支出用於扣除有效（技術難度）稅率計算。

So, in the second quarter of this year actually we finished all the applications and documented reviews by our auditor PriceWaterhouseCoopers which synced our applications to the Tax Bureau and also all the documentation was satisfactory. So, we have already deducted such tax benefits for 2018 in this quarter. Given we continue to have huge R&D spending going forward, I do think the relevant treatment will occur in 2019 and 2020 as well.

因此，在今年第二季度，我們的審計師普華永道將我們的申請同步到稅務局，實際上我們完成了所有申請和文件審查，所有文件也令人滿意。因此，我們已經在本季度扣除了 2018 年的此類稅收優惠。鑑於我們未來將繼續投入巨額研發支出，我認為相關治療也將在 2019 年和 2020 年發生。

For the interest expenses, you are right. I think in terms of the type of spread which is charged by the commercial banks will go down gradually, given that after listing we actually have more bargaining powers or get more commercial treatment from these commercial banks. I think it's relatively -- the interest expense cost increase in the second quarter is mainly due to the underlying HIBOR increase which you can see.

對於利息支出，你是對的。我認為商業銀行收取的點差會逐漸下降，因為上市後我們實際上有更多的議價能力或從這些商業銀行獲得更多的商業待遇。我認為這是相對的 - 第二季度的利息支出成本增加主要是由於你可以看到的潛在 HIBOR 增加。

But of course, at the same time, we also benefit a little bit from this in terms of interest income as well. But I think in terms of spread, the borrowing cost spread on top of the HIBOR, it will definitely continue to go down in the remaining quarters. Now I hand over to Robin for your first question.

但當然，與此同時，我們在利息收入方面也從中受益。但我認為在利差方面，在香港銀行同業拆息之上的借貸成本利差，在餘下的季度肯定會繼續走低。現在我把你的第一個問題交給羅賓。

(Interpreted) So, for our new product pipeline in the second half of this year, as for US trading, we'll start offering our clients the opportunity to lend out their stock position. And on the Hong Kong side we'll start offering the short selling function, the options and, as we just mentioned, we'll offer more mutual fund products on our platform. And also, we'll have an iPad version launching too in the third quarter. And also, we'll have a specific package catering to the more frequent traders in the second half as well.

（解釋）因此，對於我們今年下半年的新產品線，至於美國交易，我們將開始為我們的客戶提供出藉其股票頭寸的機會。在香港方面，我們將開始提供賣空功能和期權，正如我們剛才提到的，我們將在我們的平台上提供更多共同基金產品。此外，我們還將在第三季度推出 iPad 版本。此外，我們還將在下半年為更頻繁的交易者提供一個特定的套餐。

(Operator Instructions). [Husei Qui], [GPC Investment Management].

（操作員說明）。[湖塞奎]，[GPC投資管理]。

Can we get a bit more detailed on the affective commission rate? What makes it to increase by 30%, 38% or something year-on-year?

我們能否更詳細地了解情感佣金率？是什麼讓它同比增長30%、38%或什麼的？

And my second question is on the sales and marketing expenses. How do [you see] the expenses? On an accounting basis does it include the rewards that you give to new users and give to the new users of your Money Plus?

我的第二個問題是關於銷售和營銷費用。[你怎麼看]費用？在會計基礎上，它是否包括您給新用戶和給 Money Plus 新用戶的獎勵？

Okay, sure. For the commission rate, actually we keep quite firm if not even went a little bit higher compared with the fourth quarter thanks to more expirations of the discount promotions. And also a lot of new IPO activities starting from the second quarter also enhance our commission rate, given that for the IPO we normally have some one-off handling charges which have been blended into our commission revenue as well.

好的，當然。對於佣金率，實際上我們保持相當堅定，即使與第四季度相比甚至更高一點，這要歸功於折扣促銷的更多到期。此外，從第二季度開始的許多新的 IPO 活動也提高了我們的佣金率，因為對於 IPO，我們通常會有一些一次性手續費，這些費用也已混入我們的佣金收入中。

For the marketing spending, you are right. In terms of our accounting treatments for all of these -- or the reward or these coupons, we all recognize it into our marketing expenses by accrual basis. So, it is being fully reflected into our P&L on a timely basis.

對於營銷支出，你是對的。就我們對所有這些或獎勵或這些優惠券的會計處理而言，我們都按權責發生製將其確認為我們的營銷費用。因此，它會及時充分反映到我們的損益表中。

(Operator Instructions). There are no further questions at this time. I would like to hand the conference back to Mr. Daniel Yuan. Please continue.

（操作員說明）。目前沒有其他問題。我想把會議交還給 Daniel Yuan 先生。請繼續。

That concludes our call today. On behalf of the Futu 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.

我們今天的電話會議到此結束。我代表富途管理團隊，感謝您今天加入我們。如果您有任何其他問題，請隨時與我或我們的任何投資者關係代表聯繫。謝謝，再見。

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now disconnect.

女士們，先生們，我們今天的會議到此結束。感謝您的參與。您現在可以斷開連接。

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.

該筆錄中標記（解釋）的部分是由現場通話中的口譯員說出的。翻譯由贊助本次活動的公司提供。