Futu Holdings Limited

Q1 2023 Earnings Conference Call


spk00: Hello ladies and gentlemen, welcome to Future Holding's first quarter 2023 earnings conference call. At this time all participants are in a listen only mode. After management's prepared remarks there will be a Q&A session. Today's conference call is being recorded. If you have any objections you may disconnect at this time. I would now like to turn the conference over to your host for today's conference call, Daniel Yuan, Chief of Staff to CEO and Head of IR at Future. Please go ahead, sir.
spk05: Thanks, Operator. And thank you for joining us today to discuss our first quarter 2023 earnings results. Joining me on the call today are Mr. Li Li, Chairman and Chief Executive Officer, Arthur Chen, Chief Financial Officer and Robin Xu, Senior Vice President. As a reminder, today's call may include four 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. Four looking statements involving herein risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those containing any four looking statements. For more information about the potential risks and uncertainties, please refer to the company's filings with the FCC. Including any report on form 20F. With that, I will now turn the call over to Li. Li will make his comments in Chinese and I will translate.
spk07: Thank you for joining us today. As of the end of the first quarter, our asset customers have exceeded 1.5 million, which is 15% increase. According to the growth trend of asset customers five months ago, we expect to have 150,000 asset customers in the whole year. Due to the rebound of China's technology stocks in January, we have improved our customer speed in Hong Kong in the first quarter. The Hong Kong market has contributed more than one-third of competitive asset customers to us. In Singapore, we continue to enhance brand awareness through offline activities and through investment education to promote low-risk fund products. Customer growth overall remains stable.
spk05: Thank you all for joining today. As of quarter end, our paying clients surpassed 1.5 million, representing 15% growth year over year. Based on paying client growth in the first five months of the year, we expect to add 150,000 paying clients in 2023. In the first quarter, Hong Kong market contributed over one-third of paying client growth as client acquisition accelerated on the back of the rally of China technology names in January. We also witnessed resilient paying client growth in Singapore as we continue to strengthen our brand awareness through offline events and promoted demand for lower-risk fund products through industrial education.
spk07: We have expanded the market of trading products and upgraded the product functions. In Hong Kong, we began to provide customers with all-day trading-specific美股 and ETF services. As the only company in Hong Kong that provides 5 times 24-hour trading-specific美股, we have also improved the flexibility of the trading time. We have lowered the threshold for Hong Kong customers to participate in trading-specific美股. We have also launched the leverage-based foreign exchange function in Singapore, providing 36 major currency insurance transactions to customers, allowing customers to seize the opportunity to trade in the ever-changing foreign exchange market. In the United States, we have launched the US-China exchange exchange function. As the high-level exchange function has been launched, we have improved the experience of our clients and are expected to attract more high-level exchange traders to our platform. Although the market is weak in the first quarter, we have continued to enrich the product category and improve the product experience, making the asset client flow rate in this quarter still over 98%.
spk05: We continue to broaden our trading product offerings and upgrade trading features in various markets. We became the only broker in Hong Kong that allows clients to trade certain US stocks and ETFs 24 hours a day, 5 days a week, thereby enhancing the flexibility and accessibility of US stock trading. We also launched leverage foreign exchange trading in Singapore, where clients can trade 36 major currency pairs on margin to take advantage of volatilities in the foreign exchange market. In the US, we rolled out multi-layered options strategy orders for US stocks. This advanced trading function streamlines clients' trading experience and will attract more sophisticated options traders to our platform. Despite market weakness and headline regulatory news, our expanding product suite and premier user experience led to another quarter of over 98% paying client retention rate.
spk07: In the course of increasing client retention and continued promotion of entry fees, total client assets reached 4,660 billion Hong Kong dollars, increasing by 21% and decreasing by 12%. In Singapore, due to the strong entry fees and the good performance of the US stock market, total client assets and -to-customer assets have been increased by 28% and 22%. In the first quarter, we attracted many top customers in Singapore and continued to enter after opening. For example, in the first quarter, the customer we acquired in January, their mutual asset balance has increased nearly twice since March.
spk05: In Singapore, total client assets increased by 21% -over-year and 12% -over-quarter to 466 billion Hong Kong dollars due to higher -to-market value of client stock holdings and net asset inflow. In Singapore, total client assets and average client assets increased by 28% and 22% sequentially, attributable to solid net asset inflow across client cohorts and favorable US equity market performance. In the first quarter, we attracted high-quality clients in Singapore that continued to deposit funds into their trading accounts. For clients we acquired in January, for example, their average asset balance almost tripled by March.
spk07: Under ,本季度总交易量为1.2万亿港币, 还比增长12%,取决美国科技股在本季度表现出色,跑赢市场, 矮板块交易量的增长,推动每股交易量还比增长23%,达到8280亿港币, ,港股交易量还比下降6%至3720亿港币。
spk05: 市场经济与财政安全的平衡平均增长30%至35亿港币, 通过高级活动与技术贡献, ,12%的一半。 美国贡献量增长23%至828亿港币, 主要是由于美国技术名字的高贡献变化, ,在一半中,非常有效地扩充了市场。 香港贡献量是372亿港币, 下降6%的一半, 由于投资者情绪受到在2月和3月的市场调整,
spk07: 本季度,财富管理业务再次录得强劲的增长, 客户总托管资产达到370亿港币,同比增长77%,还比增长17%, 在新加坡,货币基金持续受到客户青睐, 推动总客户资产,还比增长69%, ,我们还上线了债券交易功能,扩充了产品类别。 截至一季度末, 财富管理产品在新加坡有资产客户中的渗透率, 从去年同期的1%提升至15%, 在香港,我们丰富了结构化票据的种类, 上线了固定配系票据和二元票据, 在高净值客户中深受欢迎, 截至一季度末,结构化票据资产余额还比增长超过5倍。
spk05: 财富管理业组织再次录制了一半的强劲, 与全体客户资产增长37亿港币, ,17%是一半。 新加坡,财富管理产品的高度利益 引起了69%的增长和财富购买。 我们也提升了我们的产品购买, 以提升了贸易贸易。 由于产品购买的15% 新加坡的财富管理产品的15% 从一%提升到一年前的一半。 在香港,我们丰富了结构购买的产品 通过了固定配系票据和二元票据。 这些产品获得了我们的高线购买 和产品购买的平均利益, 通过了五倍的一半。
spk07: 也至一季度末,我们有353家 IPO 分销和投资者关系客户 以及662家 E-SOP客户, %和44%。 本季度,我们作为联系牵头经办人 参与了多宗大型香港 IPO, 包括美丽田园和乐华娱乐。 根据万德数据统计显示, 在第一季度,我们作为承销商 参与了九宗香港 IPO 项目 在所有券商中排名第一。
spk05: 我们有353家 IPO 专属与 IR 客户 以及 662家 E-SOP 客户, 与其分别增长37%和 44%。 本季度,我们作为联系牵头经办人 参与了多宗大型香港 IPO, 包括美丽田园和乐华娱乐。 根据万德数据统计显示, 在第一季度,我们作为承销商 参与了九宗香港 IPO 项目 最高券项目。 最后
spk07: ,我很高兴地和大家分享一则好消息。 富足旗下的马来西亚全资子公司 已经获得马来西亚证券监督委员会 关于资本市场服务牌照的原则性批准。 我们对马来西亚运行的巨大市场机遇 充满期待, 也希望能进一步加强 我们在东南亚市场的影响力。
spk05: I am pleased to announce that our wholly owned Malaysia subsidiary has received the approval and principle for the Capital Market Services License from the Securities Commission Malaysia. We look forward to tap it into the immense market opportunity in Malaysia, and further strengthening our presence in the Southeast Asian market.
spk07: 接下来,有请我们的首席财务备阿特 介绍我们的财务表现。
spk05: Next, I'd like to invite our CFO Arthur to discuss our financial performance.
spk09: 谢谢,李文丹尼尔。 现在,请让我向你们 举行我们的财务表现。 所有财务处理员都在亚洲的财务处理中心。 全体税务是2.5亿, up 52% from 1.6 billion in the first quarter of 2022. Brokage Commission and handling charge income was 1.1 billion, an increase of 12% -over-year and 3% QQ. The -over-year increase was mainly driven by a higher financial rate of 8.8 basis points. The QQ increase was primarily attributable to higher US stock trading volume. Interest income was 1.3 billion, an increase of 125% -over-year and 14% QQ. The increase was driven by higher interest income from cash deposits and higher security lending income. Other income was 126 million, up 29% -over-year and 34% QQ. The -over-year and QQ increase were both driven by higher funder distribution income. Our total cost was 291 million, an increase of 28% from 228 million in the first quarter of 2022. Brokage Commission and handling charge expenses were 72 million, down 25% -over-year and up 13% QQ. The expenses didn't move in tandem with our Brokage Commission and handling charge income, mainly due to cost savings from our US self-clearing business. Interest expenses was 131 million, up 234% -over-year and down 28% QQ. The -over-year increase and QQ decrease were both driven by interest expenses associated with our security lending business. Processing as a service income cost was 88 million, down 5% -over-year and 9% QQ. The -over-year decrease was mainly due to lower private service fee as a result of system optimization. The QQ decrease was mainly due to lower market information fee and the data transmission fee. As a result, total growth profit was 2.2 billion, an increase of 56% from 1.4 billion in the first quarter of 2022. Growth margin was 88% as compared to 86% in the first quarter of 2022. Operating expenses were up 7% -over-year and down 2% QQ to 804 million. R&D expenses was 355 million, up 26% -over-year and 6% QQ. The increase was mainly due to increasing R&D headcount as we continue to support new product offering and invest in product localization in new international markets. Selling and marketing expenses was 141 million, down 51% -over-year and 80% QQ. Expenses declined due to decelerating client acquisition amid weak market sentiment. G&A expenses were 308 million, up 73% -over-year and down 71% QQ. The rise was primarily due to increasing headcount for general and administrative personnel to support our international business. The expenses declined QQ as we recorded one more professional service fee for our proposed Hong Kong listing law supporters. As a result, our net income increased by 108% -over-year and 24% QQ to 1.2 billion. Net income margin expanded to 48% from 35% in the same quarter last year, mainly due to strong revenue growth and lower marketing spending. That concludes our prepared remarks. We now like to open the call to questions. Operator, please go ahead. Thank you.
spk00: Thank you. To ask a question, you'll need to press star 1 and 1 on your telephone and wait for your name to be announced. And to withdraw your question, you can press star 1 and 1 again. Please stand by while we compile the Q&A roster. We'll now take our first question. Please stand by. Please stand by while we compile the Q. Once again, if you do have questions, it's star 1 and 1. Thank you. We now have the first question ready. This is from the line of Chiao Huang from Morgan Stanley. Please go ahead.
spk06: What are the new products? What new strategies will be used in the future? You just mentioned the original and new plans for the next step in Malaysia. What are your thoughts on this? The second question is about the latest changes in monitoring. We see that the main consideration is that the app will be released in China and we'll be able to provide better services to domestic users. We also think that monitoring has not changed and we'd like to ask you about the future of the industry and the changes in the customer base in China and what kind of competition will there be? I'll translate it briefly. My first question is around the overseas expansion. We have been seeing very encouraging progress in Singapore in the first quarter, so water management could give more color on the US and Australia market developments. Also, regarding the new entrance in Malaysia market, any plans and also localization in that market will be greatly appreciated. The second question is around the latest regulatory change with the removal of the Fudu app from the onshore app stores. I'm just wondering how would that impact the existing onshore users with their experience and how is the company's plan to continue to provide high-quality service to those existing clients? And maybe longer term, how do you think about the existing time, the time of existing onshore clients, what would change going forward and also how would the competition change going forward? Thank you.
spk09: Thank you, Chiyo. I think the first question, Daniel and Robin can give you some colors about our first quarter achievements in Australia and in the US. Also, our ambition plans for entering to Malaysia potentially in the second half of this year. For your second question about CSRC, the mainland regulation implications, I think Leif will give you some more colors in terms of the implications for our existing users. I can just supplement some initial data in the past week, which we observed. Hopefully, it will be helpful to you.
spk10: Hello, thank you for your question. I'm Robin. I'll answer a question about Malaysia first. Leif, please answer the questions about the US, Australia and CSRC. Thank you. As you know, we have just received an announcement from the Malaysian Supervisory Board about the principle of the ID card. Next, we will start the investment of the entire Malaysian market and the construction of a local team. We are not sure when the time will be officially released. We will also fight for the preparation of some member resources for the Malaysian Supervisory Board, SC and Malaysia Exchange. After we have made some progress, we will give you a detailed report. Thank you. Let me talk about the
spk07: US's approach to the 1G map and 2G map. In the 1G map, the US's speed of acquisition is slowing down. It is mainly because we are working on the strategy of optimizing localization in the book. We hope to put the focus on the localization of the 2G map. We are working on improving the quality of our customers. We have started to support the US stock combination and we plan to enhance the high-level functions of the expansion orders within this year. We will continue to attract customers through product value and improve the quality of our customers. In the 1G map, the number of customers in Australia has increased. After more than a year of market practice, the popularity of the brand in Australia has also been continuously increased. Through market research and practice, we have a clearer position on the target audience in Australia. We have also adopted different methods to train the brand's knowledge and customers in different trading stages. In Australia, we will continue to improve our product capabilities and improve our market use. Thank you.
spk05: For Malaysia, we just received the approval in principle for the capital markets license from Securities Commission Malaysia. Next, we will start building a local team and work on product research and development. So far, we haven't set a date for the official launch in Malaysia and we will update the market when we have more information. In terms of the US market, our growth in the US slowed down during the first quarter, primarily because we were mapping out and optimizing our localization strategy with a focus on improving client quality. We started to offer the US multi-leg options trading function in the first quarter and we plan to launch advanced function and products such as rocket orders this year while continuing to strengthen the core product capabilities around US stocks and zero-disc trading. In the future, we will also offer tailored industrial education contents and activities to enhance brand awareness, attract clients through superior product offerings and improve client quality. And for the Australian market, in the first quarter, our client acquisition in Australia has increased and after more than a year of brand building, our brand awareness in Australia continued to improve. And based on our market research and owning on our target client profile, and have adopted different methods to cultivate brand awareness and acquire clients with different backgrounds, we plan to continue to launch product functions and develop deeper customer insights in Australia.
spk07: About that... Our client here is... According to a statement made by the Chinese News Translator on February 15th in the Q&A session, the amount of investment will continue to be used by the existing overseas institutions to open up transactions. So the investment in the amount of investment will not be affected. The amount of funds should meet the requirements of the relevant national foreign exchange management. The current amount of customers and all the functions of the transaction are normal. In addition, based on our communication with the regulatory authorities, we understand that in Hong Kong, the mainlanders who already have a correct account are classified as the amount of mainland customers. So this part of the population can actually be used to open up a new account, whether it is by entering the bank or by transferring the shares, and in many ways, they can become a rich customer. So as for the current application, we have actually made some proper arrangements. Whether it is an upgrade or providing this kind of spare channel, the service can also be guaranteed. Currently, all the current amount of customers will not be affected by the use of the application. If you really encounter problems, you can also reach out to us to reach out to our customers or get help through online consulting. Thank you.
spk05: So based on CSRC's announcement on December 13th and the statements made on February 15th in response to a question from reporters, the existing client's trading will not be affected and the existing clients can continue to trade through their existing offline financial institutions. And for these existing clients to deposit more funds, it is allowed as long as they satisfy the requirements from SAFE. And currently for our existing clients, all of their trading activities and some deposit activities are as usual. And besides, the regulators further clarified that existing clients are defined as clients that already have trading accounts with actual brokers. So for mainland Chinese clients that have open trading accounts with other Hong Kong brokers, we are allowed to open accounts for them. And the fund deposits and stock transfer from other brokers to us are also allowed by the regulators. And in terms of our app upgrades, we have issued guidances on our website and our app to guide clients on how to timely upgrade the app to the latest version. And we think our current services to the existing clients are not jeopardized. And if they have questions during the upgrades, they can call our customer service line and ask questions through the app at any time and we resolve client requests very timely. Thank you.
spk09: Yes, and also I want to supplement, if I may, some initial observations since we published an announcement to remove our app from domestic Apple stores last Tuesday. We are very delighted that it seems that our existing China clients' population are very calm about this headline news. We do not see any meaningful abnormal churn rates and also the client net asset outflow in the past week.
spk00: Thank you. Thank you, Mr. Wang. We'll now take our next question. Please stand by. This is from the line of Cindy Wang from China Relaysence. Please go ahead.
spk03: Thank you. So, thanks for taking my questions. So, I have two questions. First question is related to commission rate. So, the commission rate has slightly down sequentially. So, may I know what's the reason behind it? Is that because of the US stock rebound impacted or the lower derivative trading in the first quarter? The second question is, we think we've seen the news about the food is going to open the first shop in Hong Kong. Could management let us know what kind of services this shop will provide? And could investors open trading accounts through the shop in the future? Thank you.
spk09: Thank you, Cindy. I will take the first question and for the second question, I believe we are answered. In terms of commission rate, you are right. I think the fluctuation is due to the two reasons you both mentioned. Number one is primary is due to the use of trading pattern as we elaborate to the market several times. It is more due to the US market's rebound, especially for these big tech names in the first quarter. I think going forward, we do not feel any strong competition in terms of pricing in Hong Kong and in other markets. Of course, there will be some natural fluctuations from quarter to quarter perspective due to the US stock trading pattern. And also, in the second quarter so far, given the market is trading in a very narrow range bond, so what we see the client's activities on the derivative side, especially on the option and the future, start to be decreased on a Q on Q level. So this will have some implications in the second quarter Blender commissions. I hand over to Lee for your second question.
spk07: Okay. Regarding our B&C experience shop, we have been preparing for a long time. During the renovation of the shop, we saw some re-painting of the brand and logo, which attracted our attention. We will do offline experience shop to reference the online B&C model of Apple, so that everyone can feel our products in all aspects, and understand our services. We also hope that we can answer more vividly and specifically, -to-face questions. This is also to further our success in the Hong Kong market, to reach the client's expectations that we cannot reach on the online market. After all, we have reached a certain market share in Hong Kong. We also hope to find some new ways
spk05: to do this. We actually have plans to open offline stores for a while, and we have been preparing for it. I think recently we are going through renovations at the offline store, so probably local attracted media attention. And the reason we opened this offline store was actually drawing inspirations from Apple's offline store. I think this store will help our potential clients better experience our products and services. And also, we can answer a lot of their questions -to-face. As we continue to increase our client penetration in Hong Kong, I think this store will help us reach the clients that we are not able to reach through online channels, and further expand our client acquisition channel. Thank you.
spk00: Thank you. And we'll now take our next question. Please stand by. This is from the line of Zoe Zung from Jefferies. Please go ahead.
spk01: The cost of the sales and the cost of the customer's return have all been declining. But recently we have seen that companies in Hong Kong have done a lot of promotions. What is the trend of Q2 and the cost of our customer target in the future, and the cost of our customer target in the whole year? My second question is about financial management. Please tell us about the future development strategy of financial management. Will we do our own fund-raising products, or will we still be a distributor? Thank you. I'll quickly translate it. Thanks, management, for taking my questions. Congratulations on the solid results. And I have two questions. So first, could you please provide some color about our user acquisition strategy this year? We have noted that in Q1, our sales and marketing expenses and customer acquisition cost both declined sequentially. Recently we have seen companies' promotion in Hong Kong. So just wondering what's our user acquisition target and the cost in Q2 for year and the longer term? And my second question is about our strategy for wealth management business. Will we launch our own fund products, or do we just perform as a distributor? Thank you.
spk09: Thank you, Zoe. I will take both of your questions. I think number one, in terms of the client acquisition, you can see in the first quarter, they implied the CAC is roughly in line with what we achieved in the fourth quarter of last year. I think going forward, of course, second quarter should be even more challenging given the market condition, especially in Hong Kong. The index is trading in a very narrow range, and there are no meaningful ITO projects to the market. So it will have some negative implications to our client acquisition. But having said that, I think overall our CAC target this year should be similar compared with last year. Particularly in Hong Kong, we will continue to double down our efforts in terms of the market share gains, not only just to the millennial generations which we used to take into. But as Lee and Robin mentioned before, we were also focusing on some new populations, such as the female population, and also the clients over the age of 40s. Number two, in terms of wealth management, I think you are right. In the foreseeable future, our role will still be the facilitator or distributor to our clients. We do not have any confirmed time schedule or plan to package our products by using our own money. Thank you.
spk01: Thank you.
spk00: Thank you. We'll now take the next question. Please stand by. This is from the line of Frank Shen from Credit Suisse. Please go ahead.
spk02: Thank you, Mr. Shen. I have two questions. The first one is about the interest rate. Can you please help us to further analyze the interest rate in this quarter? How much is the deposit? How much is the double-sum? Can you also help us to analyze the interest rate? The second question is about the cost. What is the goal of the operating expense? Is there any room for further optimization? I'll briefly translate. Thank you, management. This is Frank from Credit Suisse. I have two questions. The first one is on the breakdown of interest income in terms of return on deposit and return on the margin financing in the success landing business. Similarly, what are the sizes of each component of interest expenses? Secondly, how should we think about the growth rate of operating expenses going forward? Will the company take some measures to optimize the expenses? Thank you.
spk09: Thank you, Frank. I will take both of your questions. In terms of the breakdown of the interest income, as you can imagine, we are key beneficiaries of the US rate upcycle. So in the past several quarters, you can see our interest income continue to increase sequentially, largely due to the federal rate hike and also the liquidity situation in Hong Kong. So you can imagine the majority of our interest incomes come from the client's idle cash deposits nowadays. Having said that, you can see our margin balance also increase the Q of Q in the first quarter. So the absolute contribution from margin business also is very healthy. In terms of your second question regarding the operating expenses, I think we have given some guidance to the markets in the last earnings call. We're looking for roughly 15 to 20% headcount increase year over year, primarily to support our international market expansion. Most of these headcount increase will be on the IND side. Of course, there will be new overseas office opening. So there will be associate rental expenses and also the security activity colleagues will be placed in these local markets. I think going forward, definitely there will be more rigorous expenses control, especially on the GNA expenses, which we can see there is still some room to further enhance. But I think in terms of the IND, which we think it is not expenses, to some extent we think it is an investment. So we will continue to make a huge effort on the IND, which will be our core advantage compared with our peers.
spk08: Thank you.
spk00: Thank you. We'll now take the next question. Please stand by. This is from Leon Key from Daiwa. Please go ahead.
spk08: Thank you for giving me the opportunity to ask questions. I'm Leon Key from Daiwa. First of all, thank you to the management for your excellent performance. My first question is about the internal supervision. So actually, in the announcement of the GNA on December 30th or February 15th, there are several principles. One of them is effective storage. I would like to ask the management how they will evaluate the effective storage in the communication with the GNA and the principles of supervision. Because now it looks like the storage is still not moving at all. I don't know if it will affect the future. The second question is about our financial management business. We see that financial management business, whether it is QQ or EOE, the growth of AUM is very bright. We are also constantly launching new products. So maybe we can look a little longer. Do you have any plans for management? In the end, our financial management, which is the AUM of the purchasing business, and our current main brokerage, the AUM of the purchasing business, is roughly what kind of proportion? Okay, I will translate it in English. Thank you for taking my question. And congratulations on the very strong results. I have two questions. The first one is due on the regulations from the mainland China side. We noticed that from CSRC's public announcement, one of the principles from the regulator is to effectively dissolve the existing users. I was just wondering if management could share with us any colour on what's the latest dance from the regulator at the moment on the existing crime base. And the second question is on the wealth management business. We did appreciate the very strong AUM growth on the wealth management business. From a longer term, just wondering how management sees the AUM of your wealth management business, which is the buy-side business, how does your buy-side AUM compare with your sell-side traditional brokerage AUM? Just appreciate if management gives us any long-term colour on that. Thanks a lot.
spk09: Thank you, Leo. Maybe I take your second question first. I leave the first question to leave to give you some more sharing about the regulations for the existing clients. You can understand we are actually a very dedicated apprentice of Charles Schwab in the United States. So I think a lot of lessons we learned from Schwab is that eventually we want to be asset aggregators for our users and provide their lifetime financial service down the road. So far, we do not set any specific targets in terms of portions between the wealth management AUM versus our clients' trading AUM. But I think now the wealth management AUM roughly accounts to close to 10% of our total clients' assets. Hopefully, such proportion will continue to increase to 20% to 30% in the next three to five years. Definitely, there will be a very long journey to go. As you can imagine, wealth management is a business which time is your friend. But I think we are fully dedicated and fully committed on this direction to rolling the snowball step by step. Now I will hand over to leave for your first question about the main regulations.
spk07: Based on the 1230 Public Health Commission's and the statement in the Q&A on February 15, when we analyze the comments we received, by basis of the good soldiers and good customers, the number of investments on the customer and on the investments will naturally disappear. When there is no increase, as time passes, the increase will naturally be reduced. Therefore, we believe that the service guarantee of good customers will be a potential for a further reduction. Thank you.
spk05: Based on the spirit of CSRC's announcement on December 30th and statements made on February 15th, resolving existing business is to let clients turn naturally while providing them with proper services, not turning them away. Clients would stop trading due to investment losses or when they need their funds for other purposes, which will lead to a natural turn for clients. And without new clients, the number of existing clients will reduce as time goes by. Thus, serving existing clients well is the prerequisite for orderly resolving existing clients. Thank you.
spk08: Thanks a lot.
spk00: Thank you. We'll now take our next question. Please stand by. And this is from Han Pue from TICC. Please go ahead.
spk04: Hello, I'm from the SESF. Thank you for the opportunity to ask this question. Congratulations on the excellent performance of the company. I have two questions here. The first is about the overseas market. The second is about the Malaysian market. I'd like to ask the manager why he chose Malaysia as the opening of a new market. Do we have more information about the market including the space, a local military station, and some basic information about the behavior of local users and the supply of products? The second question is about the Singapore market. We see that the number of users and client assets in the Singapore market have been increasing rapidly. I'd like to ask about the current price of the Singapore market. What is the level? If we look at the first batch of customers in the first quarter of 2021, what is the current situation of the asset size of the first batch of customers? Is the first batch of customers already in a silver and silver balance? I'd like to ask the two questions here. Firstly, could you please share more about why we chose Malaysia as our new market? And do we have more information to share about the market room, the competitive landscape? The local investor behavior and the product supply in this market. And secondly, regarding the Singapore market, we see both the paying client number and the average client assets keep growing quarter over quarter in the Singapore market. If we see the cohort of the first batch in the first quarter of 2021, like two years before, how was their average client assets and their solo on-fond inflow? How did they reach the big even point and they start to make the profit? Thank you.
spk09: Okay, thank you. Maybe my colleagues, Robin, can answer the first question about the competitive landscape and also our competitive advantage in Malaysia. And I will take your second question. Robin, please.
spk10: Okay. Let me introduce the market situation in Malaysia. We did some research. Malaysia has a population of 33 million. The Chinese population is over 20%. And until 2022, the Malaysian stock market's active sales account is 2.1 million. And the US stock market, Hong Kong stock market, and Singapore stock market's account is at a volume of several hundred thousand. And there is a continuous rise in trend. Malaysia's retail stock market is showing a trend of youth and modernization. 59% of the new personal accounts in 2022 are from -year-old individual investors. So the market scale is still okay.
spk04: And
spk10: the competitive landscape in Malaysia and our advantage in the Malaysian market, Malaysia is mainly based on traditional banking and stock market. Online shopping is starting to slow down. But since the retail investors have a trend of youth, they are more receptive to Internet products. The potential of online shopping is huge. The mainstream Internet shopping currently has two products that are Japanese, S-Bit and M-Plus. The Internet shopping is still small. And the product capacity is relatively low. And there is no increase in the content of community operations and information. In addition, our product capacity has a stronger advantage. It includes more rich product types, high-level markets, order types, and basic and technical analysis tools. In addition, the exchange rate of foreign stocks in Malaysia is very high. For example, the exchange rate of US stocks and US currency is around 10 to 25 US dollars. We can greatly reduce the transaction cost of foreign stocks and also bring us a certain competitive advantage. Finally, we have active community information and rich investment materials and a strong Internet operation capability. These can become some of the different experiences that we bring to Malaysian investors. Thank you.
spk05: The population of Malaysia is around 33 million, with the Chinese population accounting for about 20%. And as of 2022, there were about 2.1 million active retail trading accounts for Malaysian stocks. While the number of trading accounts for US stocks, Hong Kong and Singaporean stocks are in the hundreds of thousands and are constantly rising. And we observed that the retail participants in Malaysia are young and are highly accustomed to digitized products. And among the new personal accounts open in 2022, 59% of them come from investors aged 23 to 45. Currently in Malaysia, the traditional bank affiliated securities firms are dominant, while the online brokers start at relatively late. However, due to the overall trend of younger retail investors and their high acceptance of Internet products, we think there is huge potential for online brokers to further penetrate. And mainstream Internet brokers, such as Rakuten, iSPEED and M+, are relatively small in scale. And their product capabilities are pretty basic with almost no social community operations. And on the other hand, our product capabilities have strong advantages, including a wider variety of products, advanced market data and order types, and rich fundamental and technical analysis tools. And in addition, the trading fees for foreign stocks, like US stocks, are pretty high in Malaysia, with each trade costing as much as 10 to 25 US dollars. And through to can greatly reduce the trading costs of these offshore stocks. And finally, we have an active social community, rich investor education materials and very strong Internet operational capabilities, all of which we think can provide Malaysian investors with a very differentiated experience. Thank you.
spk09: Thank you, Daniel and Robin. For your second question, we entered into Singapore markets roughly two years ago. So the first batch of our clients' call-call assets increased by two to three times in the past two years. We are very encouraging to see the client call-call and also the client's retention. So now for the first batch, two years clients which we acquired two years ago, they have already surpassed our client acquisition cost, which means contribute operating profits nowadays. I think that we are extremely confident about our profitability and earning powers in the Singapore markets alone. Not only just because of our call-call will continue to enhance our output and the client assets, but more importantly, there will be a lot of initiative efforts to cutting the costs down, not only the operating costs, but also the clearing costs, such as our US stock trading, which we still deal with our Singapore-based clients through our external partners. In the second half of this year, we do have a plan. We do have a plan to gradually migrate our US stock trading for Singapore clients from external partners to our internal US clearing house. So this will also meaningfully decrease our cost relating to the US stock trading, which will further enhance our profitability in Singapore. Thank you very much.
spk04: That's very helpful. Thank you very much.
spk00: Thank you. And I will now hand the conference back to Yuan for some closing remarks.
spk05: That concludes our call today. On behalf of the Food Tube Management Team, I would like to thank you for joining us. If you have any further questions, please do not hesitate to contact me or any of our investor relations representatives. Thank you and goodbye.
spk00: Thank you. This does conclude the conference for today. Thank you for participating and

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