富途控股 (FUTU) 2019 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Futu Holdings Third Quarter of 2019 Earnings Conference Call. (Operator Instructions) I must advise you this call is being recorded today.

女士們、先生們，感謝大家的耐心等待，歡迎參加富途控股2019年第三季業績電話會議。（操作員指示）我必須告訴您，今天這個電話正在錄音。

Now I'd like to hand the conference over to your first speaker for today, Mr. [Daniel Yuan]. Thank you. Please go ahead.

現在我想把會議交給今天的第一位發言者，[丹尼爾·袁]先生。謝謝。請繼續。

Thank you, operator, and thank you for joining us today to discuss our third quarter 2019 results. Joining me on the call today are Leaf Li, Chairman and Chief Executive Officer; Arthur Chen, Chief Financial Officer; and Robin Xu, Senior Vice President.

感謝營運商，感謝您今天加入我們討論我們 2019 年第三季的業績。今天與我一起參加電話會議的還有董事長兼執行長李葉 (Leaf Li)；陳亞瑟，財務長；徐彥，資深副總裁。

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 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 statement. For more information about the potential risks and uncertainties, please refer to the company's filings with the SEC, including its registration statement.

提醒一下，今天的電話會議可能包括前瞻性陳述，這些陳述代表了公司對未來事件的信念，這些事件本質上是不確定的，並且不在公司的控制範圍內。前瞻性陳述涉及固有風險和不確定性。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聲明中包含的結果有重大差異。有關潛在風險和不確定性的更多信息，請參閱該公司向 SEC 提交的文件，包括其註冊聲明。

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

說完，我現在就把電話轉給李葉。Leaf會用中文發表評論，我會翻譯。

(foreign language)

（外語）

[Interpreted] Hello, everyone. Thank you for joining us today. Despite the ongoing situation in Hong Kong and the weak equities market, we were pleased with our performance during a challenging third quarter.

【解讀】大家好。感謝您今天加入我們。儘管香港局勢持續惡化，股市疲軟，但我們對在充滿挑戰的第三季的表現感到滿意。

(foreign language)

（外語）

[Interpreted] Our total number of paying clients jumped 42% year-over-year to about 177,000. We added over 12,000 net new paying clients in the past quarter, which was roughly split between China and Hong Kong. Even though we decided to scale back our marketing efforts, given the difficult social situation, we were able to almost double the number of paying clients in Hong Kong while maintaining double-digit growth in net new client additions on a year-over-year basis. This speaks to the unique value proposition of our platform and the high potential of this market. At the same time, we were able to maintain a 98.1% client retention rate this quarter. By year-end, we expect our total paying clients to reach 190,000 to 195,000.

[解讀]我們的付費客戶總數年增 42%，達到約 177,000 名。上個季度，我們淨增加了 12,000 多個新付費客戶，其中大致分佈在中國大陸和香港。儘管我們決定縮減行銷力度，但考慮到困難的社會形勢，我們的香港付費客戶數量幾乎增加了一倍，同時新客戶淨增量同比保持兩位數增長。這說明了我們平台的獨特價值主張和這個市場的巨大潛力。同時，本季我們能夠維持 98.1% 的客戶保留率。到年底，我們預計付費客戶總數將達到 19 萬至 19.5 萬名。

(foreign language)

（外語）

[Interpreted] Client asset growth was another highlight of Q3. While Hong Kong stocks, which cover about half of our planned trading, turned in the worst performance among the major stock markets around the world in the third quarter, our total client assets actually rose to a record HKD 72 billion, an increase of 33% year-over-year and 6% quarter-over-quarter with full year net asset inflows of HKD 5.7 billion, which is a number we track closely as we transform from a purely transaction-based business model to a model that increasingly relies on fee income from assets under management.

【解讀】客戶資產成長是第三季的另一個亮點。雖然占我們計畫交易約一半的港股在第三季成為全球主要股票市場中表現最差的，但我們的客戶總資產實際上上升至創紀錄的720億港元，增幅達33%同比增長6%，環比增長6%，全年淨資產流入57億港元，這是我們從純粹基於交易的業務模式向越來越依賴費用的模式轉型過程中密切跟踪的數字所管理資產的收入。

(foreign language)

（外語）

[Interpreted] Part of this strong asset growth is driven by Money Plus, our mutual fund distribution platform. As of September 30, which was only a month after the platform was officially launched, total client assets and mutual funds had already surpassed HKD 3 billion. Besides offering 0 subscription fees and a more diverse array of products, Money Plus provides investors with a mobile-friendly platform to track their mutual fund decisions, monitor performance and understand fund basics such as duration, top holdings and geographic and industry concentration. We work with fund managers and industry experts to deliver a comprehensive selection of investor education materials across different formats, including articles, graphics, videos and even live broadcast. These materials have proven to be quite effective in facilitating investing decisions.

[解讀]這種強勁的資產成長部分是由我們的共同基金分銷平台 Money Plus 所推動的。截至9月30日，即平台正式上線僅一個月，客戶資產及共同基金總額已超過30億港元。除了提供零認購費和更多樣化的產品外，Money Plus 還為投資者提供了一個適合行動裝置的平台，以追蹤他們的共同基金決策、監控績效並了解基金基礎知識，如久期、最大持倉量以及地理和行業集中度。我們與基金經理人和產業專家合作，提供不同格式的全面精選投資者教育資料，包括文章、圖表、影片甚至直播。事實證明，這些材料在促進投資決策方面非常有效。

(foreign language)

（外語）

[Interpreted] The money market funds were popular from day 1 because they offer significantly higher interest rates than bank checking accounts and are seamlessly integrated with client brokerage accounts. This means that our clients can instantaneously redeem money market fund positions for stock purchases. In addition, fixed income funds are also gaining increasing traction on our platform, thanks to our effective investor education. We will continue to enrich our mutual fund offerings as a part of our work to provide the best investing experience for users.

【解讀】貨幣市場基金從第一天起就很受歡迎，因為它們提供的利率明顯高於銀行支票帳戶，並且與客戶經紀帳戶無縫整合。這意味著我們的客戶可以立即贖回貨幣市場基金部位以購買股票。此外，由於我們有效的投資人教育，固定收益基金也在我們的平台上獲得越來越多的關注。作為我們工作的一部分，我們將繼續豐富我們的共同基金產品，為使用者提供最佳的投資體驗。

(foreign language)

（外語）

[Interpreted] On August 12, we were granted an SFC Type 7 license that allows us to provide automated trading services. 1.5 months later, we also launched dark pool trading for Hong Kong IPOs, which is a service unique to the Hong Kong brokerage market that allows retail investors to trade their IPO allocations the day before an official listing. We're the fourth brokerage company and the only online broker in Hong Kong to provide such a service. Similar to our core trading infrastructure, our dark pool system also differentiates itself with the speed of trade execution as the number of concurrent trades processed. We believe dark pool trading will help with client acquisitions as this service enhances capital efficiency, especially when a number of high-quality IPOs take place around the same time.

【解讀】8月12日，我們取得證監會第7類執照，允許我們提供自動化交易服務。1.5個月後，我們也推出了香港IPO暗池交易，這是香港券商市場獨有的服務，允許散戶投資者在正式上市前一天交易其IPO分配。我們是香港第四家經紀公司，也是唯一提供此類服務的網路經紀公司。與我們的核心交易基礎設施類似，我們的暗池系統也透過交易執行速度（即處理的並發交易數量）來區分自己。我們相信，暗池交易將有助於獲取客戶，因為這項服務可以提高資本效率，特別是當許多高品質的首次公開募股大約在同一時間進行時。

(foreign language)

（外語）

[Interpreted] And finally, our enterprise service also had an excellent quarter. We added a record 17 new ESOP clients, which bring our total number of clients to 56 as of quarter end. In addition, we are proud to have been selected to provide U.S. IPO subscription services to Douyu during the quarter.

[解讀]最後，我們的企業服務季度也表現優異。我們新增了 17 位 ESOP 客戶，創歷史新高，截至季末，我們的客戶總數達到 56 位。此外，我們很榮幸被選中在本季度為鬥魚提供美國 IPO 認購服務。

(foreign language)

（外語）

[Interpreted] With that, I will now turn the call over to Arthur to discuss our financial performance.

[解釋] 現在，我將把電話轉給 Arthur，討論我們的財務表現。

Thanks, Leaf. We concluded third quarter with total revenue of HKD 254 million, up 13% year-on-year and down 2% q-on-q. Our paying client growth was offset by lower ARPU, given the weak equity market. .

謝謝，葉。截至第三季度，我們的總營收為 2.54 億港元，年增 13%，季減 2%。鑑於股市疲軟，我們的付費客戶成長被 ARPU 下降所抵消。 。

Let me walk you through some key of our financial data for this quarter. Brokerage commission and handling charge income was HKD 123 million, an increase of 12% from the same period in 2018 and flat on a sequential basis. Total trade volume rose by a moderate 6%, and our commission rate for U.S. stock trading slightly increased due to fewer promotional discounts and lower U.S. option trading. Brokerage commission and handling charge income contributed about 48% of our total revenues in this past quarter.

讓我向您介紹本季的一些關鍵財務數據。經紀佣金及手續費收入為1.23億港元，較2018年同期成長12%，較上季持平。總交易量溫和成長 6%，由於促銷折扣減少和美國選擇權交易減少，我們的美國股票交易佣金率略有上升。上一季度，經紀佣金和手續費收入約占我們總收入的 48%。

Interest income was HKD 115 million, an increase of 11% year-on-year and 1% Q-on-Q. Banking interest income increased due to higher idle cash positions and higher benchmark interest rate in Hong Kong compared with the same period last year. But sequentially, the benchmark interest rate has come down by about 0.3%.

利息收入為1.15億港元，年增11%，季增1%。與去年同期相比，由於閒置現金部位增加以及香港基準利率上升，銀行利息收入增加。但基準利率季減了約0.3%。

Margin financing income increased primarily due to higher-margin financing and the short selling in the U.S. market. Our margin financing and the security lending balance increased by 17% on a yearly basis and 13% Q-on-Q. Interest income contributed about 45% of our total revenue. Other income was HKD 16 million. The 39% year-on-year growth was mainly attributed to the new Money Plus business and higher enterprise service charges income. Sequentially, this fee income from our enterprise business came down by a large margin due to fewer IPO activities in the quarter.

保證金融資收入的成長主要是由於保證金融資的提高以及美國市場的賣空活動。我們的保證金融資和擔保借貸餘額較去年同期成長 17%，較上季成長 13%。利息收入約占我們總收入的45%。其他收入為港幣1,600萬元。年成長39%主要歸功於新的Money Plus業務和更高的企業服務費收入。由於本季度 IPO 活動減少，我們企業業務的費用收入大幅下降。

On the cost side, total costs were HKD 70 million, a decrease of 4% on a year, and an increase of 9% Q-on-Q. Most of the costs grow in line with our revenues. Overall, we recorded a total gross profit of HKD 185 million. Gross profit increase of 21% year-on-year but decrease of 6% Q-on-Q due to lukewarm top line growth. Gross margin was 72.6% compared with 67.8% in the same period last year and 75.5% in Q2.

成本方面，總成本為7,000萬港元，較去年同期下降4%，較上季成長9%。大部分成本的成長與我們的收入一致。整體而言，我們錄得總毛利1.85億港元。由於營收成長乏力，毛利年增 21%，但較上季下降 6%。毛利率為72.6%，去年同期為67.8%，第二季為75.5%。

In terms of operating expenses, total expenses was HKD 153 million, an increase of 45% year-on-year. This was mostly due to an increase in headcount and the rental for additional office space. Breaking down our operating expenses. R&D expenses were HKD 71 million, up 77% over the last year and 11% from last quarter. The rise was primarily due to the continued increase in headcount for our R&D function. As of quarter end, R&D personnel account for about 74% of our employees.

營運開支方面，總開支為1.53億港元，年增45%。這主要是由於員工人數的增加和額外辦公空間的租金增加。細分我們的營運費用。研發開支為7,100萬港元，較去年增加77%，較上季增加11%。這一增長主要是由於我們的研發職能人員數量持續增加。截至季末，研發人員約佔員工總數的74%。

We continue to invest in technology to enhance trading infrastructure and expand our product offerings such as Money Plus; dark pool trading; Hong Kong option trading, which was launched in early October; as well as future trading and the U.S. clearing capabilities. We view R&D expenses as a long-term investment in our business. However, we expect our headcount increase in R&D to be normalized in 2020.

我們繼續投資技術以增強交易基礎設施並擴大我們的產品範圍，例如 Money Plus；暗池交易； 10月初推出香港選擇權交易；以及期貨交易和美國清算能力。我們將研發費用視為對我們業務的長期投資。然而，我們預計研發人員的成長將在 2020 年正常化。

Selling and marketing expenses were HKD 39 million, up 13% year-on-year but down 8% Q-on-Q. We decided to scale back branding and marketing expenses, given the conditions in Hong Kong.

銷售及行銷費用為3,900萬港元，年增13%，但季減8%。鑑於香港的情況，我們決定縮減品牌和行銷費用。

G&A expenses was HKD 43 million, an increase of 38% on a yearly basis. The rise was primarily due to an increase in headcount for general and administrative personnel as well as higher professional service fee post the IPO. As a result, net income decreased by 31% year-on-year to HKD 21 million. Non-GAAP adjusted net income decreased by 27% to HKD 24 million.

一般及行政費用為 4,300 萬港元，年增 38%。這一增長主要是由於一般和行政人員人數的增加以及首次公開募股後專業服務費的增加。因此，淨利潤年減31%至2,100萬港元。非公認會計準則調整後淨利下降 27% 至 2,400 萬港元。

Overall, the weak macro environment and uncertainty in Hong Kong due to the difficult social conditions posted some fairly big challenges to our business in the past quarter. However, we believe the fundamentals of our business remain intact. Our current Q4 run rate indicates stronger growth in both paying clients and net asset inflows. And we remain confident about our ability to attract more clients and assets, especially as our new Money Plus service gains traction. We also believe that our technology investments will pay off in the medium term as we have a robust pipeline of new product trading. That concludes our prepared remarks.

整體而言，疲軟的宏觀環境以及香港因困難的社會狀況而帶來的不確定性，在過去一個季度給我們的業務帶來了相當大的挑戰。然而，我們相信我們業務的基本面仍然完好無損。我們目前的第四季營運率顯示付費客戶和淨資產流入都有更強勁的成長。我們對吸引更多客戶和資產的能力仍然充滿信心，特別是當我們的新 Money Plus 服務受到關注時。我們也相信，我們的技術投資將在中期獲得回報，因為我們擁有強大的新產品交易管道。我們準備好的演講到此結束。

We would now like to open the call to questions. Operator, please go ahead.

我們現在要開始提問。接線員，請繼續。

(Operator Instructions)

（操作員說明）

First question comes from the line of Daphne Poon of Citibank.

第一個問題來自花旗銀行的Daphne Poon。

So a couple of questions from my side. So first one is on the paying customer growth. So you mentioned about the mix is still like 50-50 from China and Hong Kong, which means that there is also a slowdown in the new paying clients from China. So I would like to understand more like whether you see that as more of a structural reason. Or do you see it more because of this market or the current market condition? And I guess what is the outlook here in terms of the new paying clients from China going forward?

我這邊有幾個問題。第一個是付費客戶的成長。所以你提到來自中國和香港的組合仍然是 50-50，這意味著來自中國的新付費客戶也有所放緩。所以我想更多地了解您是否認為這更多是結構性原因。還是因為這個市場或現在的市場狀況你看的比較多？我想中國新付費客戶的前景如何？

And also related to that is, I guess, in the current situation in Hong Kong. Can you -- wonder if you have any other like backup plans maybe in the other overseas market expansion.

我想，與此相關的還有香港目前的局勢。您想知道在其他海外市場擴張方面是否還有其他類似的備份計劃。

And then the next question is about the fund distribution business. So we'd like to understand what would be the revenue contribution from the Money Plus platform in the third quarter. And since you are currently offering 0 subscription fee, I guess, as a promotion, so would there be any timetable for you maybe to increase the fee rate or start charging fees or maybe, say, when your AUM reach a certain scale that you may expect to increase the monetization effort on that?

接下來的問題是關於基金分銷業務。因此，我們想了解 Money Plus 平台第三季的營收貢獻是多少。而且，由於您目前提供0 訂閱費，我想，作為促銷，那麼您是否有任何時間表，可能會提高費率或開始收取費用，或者也許，比如說，當您的AUM 達到一定規模時，您可以期望增加這方面的貨幣化努力？

And lastly, just on the sales and marketing expense. Since you mentioned you scaled down on the marketing efforts, but it seems the expense has not come down that much in Q3. So will be wondering whether there is time lag and what will be the outlook in Q4, like should we expect a more -- a better decline of the expense in the fourth quarter?

最後，只是銷售和行銷費用。既然您提到您縮減了行銷力度，但第三季的費用似乎並沒有下降那麼多。因此，我們會想知道是否存在時間滯後以及第四季度的前景如何，例如我們是否應該預期第四季度的費用會有更多更好的下降？

Thank you, Daphne. This is Arthur. I will answer your 3 questions. Well, number one, in terms of the new paying clients acquired in third quarter, actually, the slowdown in China, I think it is more due to the equity market volatilities in third quarter. We do not see any structural slowdown in the Mainland.

謝謝你，達芙妮。這是亞瑟。我來回答你的3個問題。嗯，第一，就第三季獲得的新付費客戶而言，實際上，中國的成長放緩，我認為這更多是由於第三季股市的波動。我們並未看到內地出現任何結構性放緩。

And for the mutual fund distributions, the direct revenues in the third quarter is still relatively small, which we included in the other income items. But we think the AUM growth will remain robust in the fourth quarter. And we actually now share a certain portion of the mutual funds management fees, which we record as our distribution income. But we do note particular disclosure -- the particular percentage of the commission fees allocated to our site.

對於共同基金分配，第三季的直接收入仍然相對較小，我們將其計入其他收入項目。但我們認為第四季資產管理規模成長將保持強勁。我們現在實際上分享共同基金管理費的一部分，我們將其記錄為我們的分配收入。但我們確實注意到了特別的披露——分配給我們網站的佣金的特定百分比。

And also, for the marketing expenses, you are right, there are certain time lags in the third quarter. I think the current situation or the data we witnessed in October, actually, we have seen some market recovery, partially due to more and more IPO activities in Q4 such as the recent Alibaba's IPOs in Hong Kong, which give us a lot of good momentum in terms of new paying clients acquired and also new asset inflow. So I do think the marketing expenses may -- should be -- keep stable in Q4 compared with Q3.

而且，對於行銷費用，你是對的，第三季有一定的時間延遲。我認為目前的情況或我們在10月份看到的數據，實際上，我們已經看到了一些市場復甦，部分原因是第四季度越來越多的IPO活動，例如最近阿里巴巴在香港的IPO，這為我們帶來了很多良好的動力就獲得的新付費客戶和新資產流入而言。因此，我確實認為第四季度的行銷費用可能（應該）與第三季相比保持穩定。

And also just to supplement for other markets expansion. I think that currently, we will still focus on our existing markets in Hong Kong. Of course, you may recall that we have the license in the U.S. market as well. We are also polish our products for our U.S. markets, which I think will be another growth drivers for our new and paying clients acquired in 2020.

而且也只是其他市場拓展的補充。我認為目前我們仍會專注於香港現有的市場。當然，您可能還記得我們在美國市場也有許可證。我們也正在為美國市場完善我們的產品，我認為這將成為我們在 2020 年獲得的新客戶和付費客戶的另一個成長動力。

Okay. So looking into next year, does it mean that, I guess, the Hong Kong market will still be your primary focus, I guess, like Hong Kong and Mainland China clients will still be the primary drivers or your focus in terms of growth or customer acquisition?

好的。因此，展望明年，這是否意味著，我想，香港市場仍然是您的主要關注點，我想，就像香港和中國大陸客戶仍然是主要驅動力，或者您在增長或客戶方面的關注點獲得？

Yes. You are right.

是的。你是對的。

(Operator Instructions)

（操作員說明）

Our next question is from the line of [Stanley Chen] of Goldman Sachs.

我們的下一個問題來自高盛的[Stanley Chen]。

I actually have 3 questions. The first one is still regarding to the marketing expense. We find that per paying client acquisition costs, which is calculated as marketing spend divided by new paying clients, actually decreased -- actually increased quarter-over-quarter. We're just wondering the reason for the increased paying client acquisition costs. Does it have anything to do with the recent social events in Hong Kong? And on top of that, we'd really appreciate it if management team could provide guidance on marketing expense and paying clients' outlook for next year.

我其實有3個問題。第一個仍然是關於行銷費用。我們發現，每位付費客戶的獲取成本（按行銷支出除以新付費客戶計算得出）實際上有所下降，但實際上比上一季增加。我們只是想知道付費客戶獲取成本增加的原因。與香港最近發生的社會事件有關係嗎？最重要的是，如果管理團隊能夠提供有關行銷費用和支付客戶明年前景的指導，我們將不勝感激。

And my second question is on commission fee rate. We see that Futu's gross commission fee rate is still at a pretty high level. It even increased a bit quarter-over-quarter. We think it would be great if management team can add some color on this.

我的第二個問題是關於佣金費率。我們看到富途的毛佣金率仍然處於相當高的水平。它甚至比上一季略有增加。我們認為，如果管理團隊能夠為此增添一些色彩，那就太好了。

And my last question's on the other income. We're just wondering if we could have more detailed explanation on the decreased other income quarter-over-quarter. That's all for my questions.

我的最後一個問題是關於其他收入的。我們只是想知道是否可以對其他收入季度環比下降的情況有更詳細的解釋。這就是我的全部問題。

Sure. Thank you, Stanley. Let me just answer one by one. For the marketing expenses, actually, certain marketing advertisements have to be scheduled ahead of a lot of events. So there are some fixed costs, which we have already committed before we have the expectations of recent social events in Hong Kong.

當然。謝謝你，史丹利。我就一一回答吧。為了行銷費用，實際上，在許多活動之前必須安排某些行銷廣告。所以有一些固定成本，在我們對香港最近的社會事件有預期之前，我們就已經承擔了這些成本。

And secondly, for the new paying clients' guidance and also the marketing expenses guidance for the next year, actually, we are now in the process of internal budgeting for our 2020 outlook. So we will update you for these datas in our fourth quarter earning calls.

其次，對於新付費客戶的指導以及明年的行銷費用指導，實際上，我們現在正在為 2020 年的前景制定內部預算。因此，我們將在第四季的財報電話會議上向您更新這些數據。

For the commission rate, actually, we do not feel any pressures in terms of commission rate fee cut. You can see on a sequential basis, our commission rate remains quite stable in the third quarter. The partially increase was due to more U.S. option tradings by our paying clients.

對於佣金率來說，實際上我們並沒有感受到佣金率費用下調的壓力。您可以看到，從環比來看，我們第三季的佣金率保持相當穩定。部分成長是由於我們的付費客戶進行了更多的美國期權交易。

For the other income, sequentially, you see some backward on a Q-on-Q basis. This is due to the IPO activities, relatively, was quiet in third quarter compared with the second quarter.

對於其他收入，您會看到環比落後。這是因為與第二季相比，第三季的IPO活動相對平靜。

Our next question is from the line of [Lily Liu] of HSBC.

我們的下一個問題來自匯豐銀行的[Lily Liu]。

I have 2 questions. The first one is on -- do we have a breakdown of the trading volume in terms of region, for example? Is the number between Hong Kong and U.S. market still 50-50? And how do we react to the 0 commission campaign in the U.S.? Because we recently see some quite strong marketing events from our competitors in the Hong Kong region for the U.S. stock. So do you think the 0 commission campaign will happen in Hong Kong in the future?

我有 2 個問題。第一個是－例如，我們是否有按地區劃分的交易量細分？香港和美國市場的數量還是50-50嗎？我們對美國的零佣金運動有何反應？因為我們最近看到香港地區的競爭對手對美股做了一些相當強勢的行銷活動。那麼您認為零佣金活動未來會在香港發生嗎？

And second question is about the R&D expense. So I see the details of our disclosure said the headcount of R&D is included in the expense, and it will also be delayed into the next few quarters. So do we have a CapEx estimate for the R&D expense in the following quarters?

第二個問題是關於研發費用。所以我看到我們揭露的細節說研發人員是包含在費用裡的，而且也會延到接下來的幾季。那我們對接下來幾季的研發費用有資本支出估算嗎？

Thank you, [Lily]. Let me just answer your second question first. And for the first question, in particular, the expectations of the 0 commissions competitions my -- our CEO, Leaf, will address this question.

謝謝你，[莉莉]。我先回答你的第二個問題。對於第一個問題，特別是對零佣金競賽的期望，我們的執行長 Leaf 將回答這個問題。

For the R&D side, I think, next year, the situation will be more normalized. In particular, this year, we heavily invest a lot of new headcounts in the R&D session, which accounts, as I mentioned before, in terms of total headcount, R&D and also the product team already account for 74% of our total employees. And R&D versus the sales revenue ratios already achieved close to 25% in the third quarter. I do think this ratio will come down and be normalized in 2020.

對於研發方面，我認為明年情況會更加正常化。特別是今年，我們在研發環節投入了大量的新人，正如我之前提到的，從總數來看，研發和產品團隊已經佔到了我們員工總數的74%。第三季研發與銷售收入比率已接近25%。我確實認為這一比率將在 2020 年下降並趨於正常化。

And also, for the trading volumes, in the past quarter, actually, the U.S. trading volumes is slightly bigger than the Hong Kong trading volumes. In terms of breakdown, U.S. trading roughly accounts for 52% of the total trading volumes; and Hong Kong, plus Asia, Hong Kong stock net roughly account for 48% of the total trading volumes in the third quarter.

另外，就交易量而言，實際上，在過去的一個季度，美國的交易量略大於香港的交易量。從細分來看，美國交易量約佔總交易量的52%；和香港，加上亞洲，港股淨額約佔第三季總交易量的48%。

Now I hand over to Leaf for your questions regarding 0 commission competition in the U.S. and also in Hong Kong.

現在我請Leaf回答您關於美國和香港零佣金競爭的問題。

(foreign language)

（外語）

[Interpreted] We are very much aware that only brokers such as Charles Schwab started offering 0 commissions in the third quarter. But this 0 commission offering is mostly targeting the U.S. domestic users. And as you know, most of the paying clients come from Mainland China and Hong Kong, and these are and will be our main focus in the near term.

[解讀]我們非常清楚，只有像嘉信理財這樣的經紀商在第三季開始提供0佣金。但這種零佣金服務主要針對美國國內用戶。如您所知，大多數付費客戶來自中國大陸和香港，這些是我們近期的主要關注點。

And secondly, as you probably know, for the transaction fees for Hong Kong, most of the charges actually come from the government charges, especially the stamp duties. So if our trading volume is HKD 10,000, for example, the stamp duty will be HKD 100. So at Futu now, we are offering the commission rate of 3 bps with a minimum charge of HKD 3. So you'll see that mathematically, by offering 0 commission, it does not decrease the overall planning commission rate by that much. And most of the U.S. online brokers, they haven't done much of branding and marketing in the Hong Kong local market, and we don't think they have very strong client acquisition capabilities in the Hong Kong local market.

其次，大家可能也知道，香港的交易費用，其實大部分來自於政府收費，尤其是印花稅。例如，如果我們的交易量是10,000港元，那麼印花稅就是100港元。所以現在在富途，我們提供3個基點的佣金率，最低收費3港元。所以你會發現，從數學上來說，提供0佣金，並不會降低整體規劃佣金率那麼多。而大多數美國線上經紀商，他們在香港本地市場沒有做太多的品牌和行銷工作，我們認為他們在香港本地市場沒有很強的獲客能力。

And looking at the local brokers in Hong Kong. And right now, I think most of the Hong Kong brokers don't derive a significant portion of their revenue from the commissions income, around 15%. And so we think in the short term, we don't expect any other brokers in Hong Kong to start offering 0 commission. So I think in the short term, we expect the commission rate to be quite steady, and we also don't have any plans to start offering 0 commission trading. Does that answer your question?

再看看香港當地的經紀商。目前，我認為大多數香港經紀商的收入大部分都不是來自佣金收入，大約是 15%。因此，我們認為短期內，我們預計香港的任何其他經紀商都不會開始提供零佣金。所以我認為短期內我們預計佣金率會相當穩定，而且我們也沒有任何計劃開始提供0佣金交易。這是否回答你的問題？

Well, thank you.

嗯，謝謝。

(Operator Instructions)

（操作員說明）

We have a question from the line of Daphne Poon of Citi.

我們收到花旗銀行 Daphne Poon 的提問。

So just a follow-up on the fund distribution business. Just wondering can you give us a rough idea like when do you expect a more meaningful revenue contribution from that business because you also mentioned that you're shifting from trading volume-driven business to a more asset-driven business. So yes, wondering what would be the time line, whether it's, say, a few quarters down the road or maybe it takes longer, say, 2 to 3 years down the road that we see a more meaningful contribution from that part of the business.

所以只是基金分銷業務的後續。只是想知道您能否給我們一個粗略的想法，例如您預計該業務何時會產生更有意義的收入貢獻，因為您還提到您正在從交易量驅動型業務轉向資產驅動型業務。所以，是的，想知道時間線是怎樣的，是在幾個季度後，還是需要更長的時間，例如 2 到 3 年，我們才能看到這部分業務做出更有意義的貢獻。

Sure, Daphne. I think our near-term targets for the fund distribution is the user engagement and accumulated assets. That's why we are not too hunger to charge subscription fees, in particular, these upfront costs to our users. I do expect our AUM towards the year end, we will achieve or exceed at least HKD 5 billion in terms of total fund distributes. And I think in terms of the gross profit contributions in 2020, I do look forward -- it will close to high single-digit gross profit levels contribution on the fund distribution in 2020.

當然，達芙妮。我認為我們近期的基金分配目標是用戶參與度和累積的資產。這就是為什麼我們不太願意收取訂閱費，特別是我們用戶的這些前期費用。我確實預計到年底我們的資產管理規模將達到或超過至少 50 億港元的基金分配總額。我認為就 2020 年的毛利貢獻而言，我確實期待——2020 年基金分配的毛利貢獻將接近個位數的高水準。

(Operator Instructions)

（操作員說明）

There are no more questions as of this time. I would like to hand the conference back to Mr. [Daniel Yuan]. Please go ahead.

目前沒有更多問題。我想把會議交還給[袁丹尼爾]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。我謹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。

(foreign language)

（外語）

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

謝謝。女士們、先生們，今天的會議到此結束。感謝您的參與。你們現在可以斷開連結了。