Futu Holdings Limited

Hello, ladies and gentlemen. Welcome to Futu Holdings' third quarter 2024 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, Head of Strategy and IR at Futu. Please go ahead, sir.

Thanks, Operator, and thank you for joining us today to discuss our third quarter 2024 earnings results. Joining me on the call today are Mr. Leif Leif, 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. forward-looking statements involving hearing risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those containing 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 annual report. With that, I will now turn the call over to Leif. Leif will make his comments in Chinese, and I will translate.

In this quarter, we have added 15.4 million real estate customers, with a total growth of 138%, compared to the basic level. The total number of real estate customers has reached 2.2 million, with a total growth of 33%. In the first three quarters of 2024, we have added 48.7 million real estate customers. We expect that, with the steady growth of mature market customers and the double promotion of the new market, Thank you all for joining our earnings call today. We wrapped up the quarter with 154,000 new paying clients, up 138% year-over-year, and flattish quarter-over-quarter.

Our total paying clients reached approximately 2.2 million, up 33% year-over-year. Three quarters into 2024, we have acquired 487,000 paying clients. and we expect full-year growth to comfortably exceed our guidance of 550,000, thanks to resilient growth in established markets and strong momentum in newer ones.

In Hong Kong and Singapore, we continue to optimize our customer strategy and launched a profitable marketing activity. With the increase in market sentiment, the customer pace of the two countries has increased rapidly, contributing to more than one-third of the competitive real estate customers this quarter. In Malaysia, for three consecutive quarters, In our seven markets, we hold the first place in the competition of real estate customers. In Malaysia, we strive to continuously improve the image of the brand and enrich the product category, further strengthening the portfolio as a value proposition for a one-stop investment platform. In Japan, although the number of investors in the third quarter should be affected by the market, the investors' enthusiasm for local stocks has weakened, but our customer performance is still stable.

As we continued to iterate on various client acquisition strategies and launched effective campaigns amid elevated market sentiments, client acquisition accelerated in Hong Kong and Singapore, which collectively contributed to over one-third of new paying clients. Three-quarters in a row, Malaysia remained the top contributor of new paying clients among our seven markets. We're committed to further elevating our brand image in Malaysia, and we've brought in product offerings to enhance our value proposition as a one-stop investment platform. In Japan, we made steady progress on client acquisition despite doing lay interest in Japan equities among retail investors amid market pullback in the third quarter.

In terms of new products, we launched the U.S. stock market reinvestment plan in Hong Kong. We launched the U.S. stock market reinvestment plan in Hong Kong. We launched the U.S. stock market reinvestment plan in Hong Kong.

In terms of new product offerings, we rolled out US stock dividend reinvestment plan in Hong Kong. We launched NISA savings account and mutual funds in Japan, and recently supported US margin trading and Japan options trading, which started to gain decent traction among our clients. In Malaysia, we rolled out Ringgit and USD Denominated Money Market Funds. We also became the first broker in Malaysia to offer U.S. options trading.

Customer total assets increased by 48% in the same ratio and increased by 20% in the same ratio, reaching 6,930 billion Hong Kong dollars. This quarter, customer total assets increased in the same ratio not only due to a strong income, but also due to the increase in the market value of customers brought by the Chinese stock market at the end of the quarter. In Singapore, with stable entry and market momentum, the total and average customer assets have increased by 18% and 10% respectively. The average customer assets in the United States, Canada, and Australia have increased by double in three consecutive seasons. In the third season, the overall risk of customers maintaining higher risks was higher than that of the first unit. However, the market fluctuation in September caused some customers to stop working before the end of the month, resulting in a 7% decline in the net profit and loss ratio to HK$411 billion.

Total client assets grew 48% year-over-year and 20% quarter-over-quarter to HK$693 billion. The sequential increase was due to strong net asset inflow across markets, and to a greater extent, the appreciation of client stockholdings amid China equity surge towards quarter-end. In Singapore, total and average client assets grew by 18% and 10% quarter-over-quarter, driven by robust net asset inflow and favorable market movements. U.S., Canada, and Australia all recorded double-digit sequential growth in average client assets for the third consecutive quarter. In the third quarter, our clients maintained their risk-con mode, as evidenced by a single-digit sequential growth in daily average margin balance. Sharp market movements in September prompted some clients to take profit. As a result, margin financing and securities lending balance as of quarter-end slid by 7% to HK$41 billion. This quarter, the total trading volume increased by 17%, reaching HK$1.9 trillion.

Among them, the trading volume of U.S. shares increased by 23%, reaching HK$1.53 trillion. The growth of the exchange rate of each stock is mainly due to the growth of customers' interest in technology stocks and ETF trading in August. Although the market sentiment of Hong Kong stocks in July and August is relatively low, the activity of trading is not high, but in September, customers quickly replenished their trading enthusiasm for Chinese stocks. Overall, the exchange rate of Hong Kong stocks in the third quarter decreased by 3% to HKD34.8 billion. It is worth noting that on September 23, Hong Kong stock trading volume rose by 17% quarter of a quarter to HK$1.9 trillion, of which U.S. stock trading volume outpaced the overall growth by rising 23% sequentially to HK$1.53 trillion.

The growth in U.S. stock trading was fueled by elevated trading interests in technology stocks and leveraged ETFs amid heightened volatility in August. Despite sluggish sentiments and rather muted trading activities in July and August, our clients quickly picked up the momentum of China equities in September. Overall, Hong Kong stock trading volume slipped by 3% quarter-over-quarter to HK$348 billion. Notably, during the week of September 23rd, Hong Kong stock trading volume surged by 267% week over week, and together with China ADRs, contributed to over half of our trading volume for the week.

Wealth management recorded another quarter of strong growth on the back of enticing yields of money market funds and fixed income funds.

As the quarter ends, total client assets grew 87% year-over-year and 22% quarter-of-a-quarter to HK$97 billion. Around 27% of our paying clients held wealth management products, up from 25% in the second quarter. To cater to client demand for asset allocation, we launched an ETF-based robo-advisory service in Hong Kong and Singapore.

At the end of the third quarter, our IPO sales and IR customer numbers reached 461, We have 461 IPO distribution in our clients, up 17.9% year-over-year. We underwrote the three largest Hong Kong IPOs in the first three quarters of 2024. 接下来有请我们的首席财务官阿泽介绍我们的财务表现。

next i'd like to invite our cfo author to discuss our financial performance thank you leave and daniel please allow me to walk you through our financial performance in the third quarter all the numbers are in hong kong dollar unless otherwise noted total revenue was 3.4 billion of 30 from 2.7 billion in the third quarter of 2023 brokerage commission handling charge income was 1. of 52% year-over-year and 11% Q-over-Q. The increase was mainly driven by a 75% year-over-year and a 70% Q-over-Q growth in total trading volume, partially offset by the decline in blended commission rate as our client gravitate towards higher-priced stocks. Our blended commission rate went down from 8.5 basis point to 8 basis point Q-over-Q. Interest income was $1.7 billion of 13% year-over-year and 7% Q-over-Q. The year-over-year increase was mainly driven by higher margin financing income due to increase in daily average margin balance and higher interest income from security borrowing and the lending business. The Q-over-Q increase was mainly driven by the growth in bank deposit interest income and margin financing income. Other income was $209 million of 52% year-over-year and 30% Q-over-Q. The year-over-year and Q-over-Q increase was both primarily attributable to higher funded distribution income and higher currency exchange income. Our total cost was $625 million, an increase of 43% from $437 million in the third quarter of 2023. Brokerage commission handling charge expenses were $82 million, up 30% year-over-year. Brokerage expenses grew by a narrow margin than brokerage income year-over-year, mainly due to cost savings from our U.S. self-clearing business. Interest expenses was $414 million, up 43% year-over-year, and a 10% Q-over-Q. The year-over-year and the Q-over-Q increase was mainly driven by higher interest expenses associated with our security borrowing and the lending business. Processing and servicing costs were $130 million, a 51% year-over-year and a 19% QVQ. The year-over-year was mainly driven by higher product service fee and the data transmission fees as a result of growing business scale. As a result, total gross profit was $2.8 billion, an increase of 27% from $2.2 billion in the third quarter of 2023. Gross margin was 81.8% as compared to 83.5% in the year-ago quarter. Operating expenses went up 21% year-over-year and a flattish Q-over-Q to $1.1 billion. R&D expenses were $385 million, up 7% year-over-year and 3% Q-over-Q. The year-over-year and Q-over-Q increase were mainly driven by increasing R&D headcount to support new products and new markets. Selling and marketing expenses were $314 million, up 49% year-over-year and down 7% Q-over-Q. The year-over-year increase was mainly driven by a triple-digit year-over-year growth in new paying clients, partially offset by lower client acquisition costs. The Q-over-Q decline was mainly due to improved efficiency in customer acquisition. G&A expenses were $381 million of 18% year-over-year and 5% Q-over-Q. The year-over-year and the Q-over-Q increase was primarily due to an increase in headcount for general and administrative personnel. As a result, income from operation increased by 31% year-over-year and 17% year-over-year, Q-over-Q to $1.7 billion. Operating margin increased to $50 billion. 0.4% from 49.8% in the third quarter of 2023. Our net income increased by 21% year-over-year and 9.1% to 1.3 billion. Net income margin declined to 38.4% in the third quarter as compared to 41.2% in the same quarter last year. Lower net income margin was mainly due to the unrealized foreign exchange laws from the appreciation of IMB in the third quarter. Our effective tax rate for the quarter was 15.3%. In addition, we are pleased to announce that our board of directors approved a special cash dividend of 25 US dollar cents per ordinary shares or two US dollars per ADS. to holders of ordinary shares and holders of ADS of record as of the close of business on December 6, 2024. That concludes our prepared remarks. We now like to open the call to questions. Operator, please go ahead.

Thank you. As a reminder to ask a question, you will need to press star 1-1 on your telephone keypad and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Please stand by.

We will now take our first question. Please stand by. And the first question comes from the line of Cindy Wang from China Renaissance. Please go ahead. Your line is now open.

Okay. Thank you, Mr. Guan, for giving me this opportunity to ask a question. I have two questions I would like to ask. The first one is that China's assets have significantly increased since the end of September. The current situation in the fourth quarter Can you give us a color? How much is the transaction volume of Hong Kong and ADR? I don't know if this will help our overall overall blended commission rate in the fourth quarter, and whether the rebound of the Hong Kong stock has helped a new customer in Hong Kong. For the second question, I would like to ask about the crypto business. Can you tell us about the development of the crypto business in the third quarter? Thanks for taking my question. I have two questions here. First, since the China asset rose since the end of September, so based on current run rate in fourth quarter, can you give us some color on the Hong Kong stock trading volume and ABR trading volume as a percentage of your total trading volume? And would that help your overall blended commission rate in fourth quarter? and also the new customer acquisition in Hong Kong. Second question is related to crypto. Can you give us some color on the crypto development in third quarter? And will the Bitcoin price rally since October would help your overall transaction amount and the new home client? And also, could you give us update for the VATP license in Hong Kong? Thank you.

Thank you, Cindy. Let me answer your second question about crypto. And I will leave the first question to my colleague, Daniel. uh, uh, to update you. As Liv just mentioned, in the past three seasons, we have launched a transaction on the cryptocurrency in Hong Kong. Currently, we have provided four mainstream transactions on our platform. From the online to the current situation, the satisfaction of the entire customer, including the penetration rate of our customers, is very good. Currently, Japan's exchange rate for digital currency has climbed from millions to about 1,000 to 2,000. In terms of the updates of BATP license, we are still in the process of of, you know, be reviewed by the regulators in terms of some on-site visits and for their inquiries. Hopefully we can get the market some update in the near future. And as Liv mentioned in the opening remark, we have already launched our crypto business in the third quarter in Hong Kong. Given the recent data, we think the penetration of the users and also the trading volumes pick up very, very meaningfully. Now, I think the daily average trading volumes on crypto assets in Hong Kong was in the range of $10 million to $20 million every day. And I do think the penetration and the trading volume will continue to keep current momentum And considering the recent rallies on the digital assets, it will definitely give us positive help in our new client acquisitions in Hong Kong recently.

Hello, Cindy. I'm Daniel. Let me answer your first question. At the end of September and the beginning of October, we saw a rise in the trading volume of Hong Kong and China. In the opening remarks, Leif mentioned that the ratio of the two exchanges was once more than 50%. After that, due to some recalls of China-related assets, the ratio of the two exchanges has declined, but it is still significantly higher than the level of 3Q. So far, 4Q is doing well in the entire US stock market. Especially before and after the general election, many of our clients' favorite technology stocks performed very brilliantly, so the overall US stock trading volume has improved significantly. In terms of the commission rate, there are a lot of factors that affect the commission rate. The quarter-to-date commission rate has a slight drop in 4Q. This is mainly due to the fact that although the exchange rate of state-owned products has improved, the increase in state-owned products is greater than that of state-owned products. The overall commission rate has dropped a bit. So in late September, early October, the trading volume and the percentage of trading volume of Hong Kong stocks and China ADRs experienced a rapid surge. And as Lee mentioned in his opening remarks, The trading volume contribution of Hong Kong stocks and China ADRs altogether exceeded over 50% at some point. And later on, as a lot of China assets experienced pullback, both numbers experienced some sequential decrease. But overall, it is still much stronger than what we've seen in the third quarter. So in the fourth quarter so far, the U.S. equities have performed very well, especially around the U.S. elections. Some of the technology names that our clients are particularly fond of experienced rapid surges. So overall in the fourth quarter, we have seen a very meaningful sequential increase in our U.S. stock trading volume. And as for the blended commission rate, as you are aware, there are a number of factors that affect our blended commission rates. In the fourth quarter so far, we have seen a mild pullback in the commission rate, mostly because the trading volume increase of our cash equities increased at a faster pace than derivatives, which brought a slight decline in blended commission rates. And in terms of client acquisition, quarter to date, we have seen an increase in our new paying clients. And that increase is primarily attributable to our Hong Kong client acquisition, mostly because the Hong Kong Stocks and China ADRs performed very well in October, in early October, and had experienced continued volatility, which helped with client acquisition.

Thank you.

Thank you.

We will now take our next question. Please stand by. And the next question comes in the line of Chiao Huang from MS. Please go ahead. Your line is now open.

Thank you for the opportunity to ask me a question. I'm Wang Chi Yao from Moment Sanity. I have two questions to ask. The first one is about the special stock market. I want to ask what are your thoughts on the special stock market at this time, especially if we combine some of the growth in the overseas market and the investment in the overseas market, how do we look at the stock market return in the future? If we look at it in the next two or three years, we can expect some more sustainable stock return. This is the first question. The second question is related to sales marketing. I would like to ask, specifically in terms of market sales costs, how big is the ratio this year? It is a relatively more fixed amount of revenue. And how big is the ratio? It is more related to the number of customers. 那么我们如果看这个明年的这个整个营销费用的一个budget的话呢,里面其中这个固定的一个部分大概我们一般会预算有多少比例的一个成长。 我简单翻译一下。 So I got two questions. One is about the thinking around the special dividend, especially how to put that into contact with the growth potential in the overseas market and also the related investments in these markets. And will we have a more recurring shareholder return plans in the next, say, two to three years? The second question is on the sales and marketing expense. So just wondering what portion of sales marketing expense should be more fixed in nature and what portion should be more variable and depend on the current acquisition number. So what should we expect for, you know, the fixed budget to grow in 2025 given, you know, and our plans in the different overseas markets? Thank you. You're welcome.

Thank you, Chi-Yao. Let me answer your first question about the special dividend, and I also will leave the second question to Daniel. First of all, in the past few weeks, we have just passed the 12th anniversary of FUTU's personal celebration. At the same time, this year is also the 5th anniversary of FUTU's listing in the US NASDAQ in March 2019. In the past, we have always paid a lot of attention to shareholding. Since 2021, we have set up a number of shareholding recovery plans to show our importance to shareholding value. Considering that this year is the fifth anniversary of the company's listing, we want to take advantage of this special time We want to express our gratitude to the shareholders who have accompanied our company all the way to the end. The total amount of our bonus this time is about $2.8 billion, accounting for about 7.8% of our total capital at the end of the third quarter. So considering the current balance sheet of the company and the current situation of the cash flow, we believe that the current development of cash encouragement for the future business of the company and some of the financial business we currently have does not constitute any obstacles. Qi Yao, you just asked, for example, we are looking at the future situation in 2025 and 2026. I think one is that in 2025, we will combine the situation of the entire capital market, including the future development of the company, to consider how we can further provide a corresponding return to our shareholders. In the future, the way the shareholders will return will not be limited to the distribution of cash encouragement, including a return on company shares, and other different measures. Now, you may be aware this year, in particular third quarter, is a very special moment for Futu. A couple of weeks ago, we just celebrated our 12th anniversary of Futu, and this is also the fifth anniversary since the inception of our IPO in 2019. We very pay attention to the shareholder reward and the shareholder values. Since 2021, we have set a series of share repurchase programs to demonstrate our commitment to the shareholder values. Considering this year is the fifth anniversary of our listing, we want to take this opportunity to express the gratitude to our long-term shareholders in the past. This is the major rationale for this special cash dividend payout. And the total size for this cash dividend amounting to $280 million, which accounts to 7.8% of the total net equities at the end of the third quarters. Considering our balance sheet and also our cash on hand, we think This size is appropriate and there will be no negative implications to our client acquisitions, our current operations afterwards. As to whether we will set up more visible dividend payout policies, we will make the revisit in next year after taking into account the market conditions and our future business development. Thank you very much.

Hello, I'm Daniel. I will answer the second question about sales and marketing expense. Currently, if we divide the sales and marketing expense into two categories, one is the cost of personnel, and the other is the cost of marketing and market promotion. The cost of personnel may be more than half of sales and marketing, and the rest is market promotion. It can be understood that personnel-related expenses are relatively fixed. From the perspective of next year, considering that we are currently in the phase of rapid development of a few new markets in 2024, and considering that we do not have a plan to expand the new market temporarily next year, the growth of personnel should be relatively restrained, and the market-related promotion costs are related to many external factors. Some more specific and more standardized guidelines will be shared with you at the 4th quarter phone conference in March next year. So among our sales and marketing expense, over 50% is salary-related, which can be interpreted as more fixed in nature, and the rest is marketing-related. And as we've passed the initial rapid expansion phase in a couple of new markets this year, and as we have no imminent plans to launch in any new markets next year, so overall, from a headcount perspective, I think we'll be relatively disciplined next year. And the marketing expense will depend on a variety of external factors.

So in our fourth quarter earnings call in March next year, we'll give out more guidance. Thank you.

Thank you. Thank you. We will now take our next question. Please stand by.

And the next question comes from the line of Yufan from CICC. Please go ahead. Your line is now open. Okay.

The first one is about the breakdown of our customer's total assets. I would like to ask how much of the customer's income is from the three-week period, and how much is from the growth of the market-to-market, and how much is from the distribution of each region? And the second question is about the breakdown of interest rates. I would like to ask about the three seasons of our interest rates, including the interest rate ratio from the cash fund to the IPO. And then whether we have an impact of a decline in interest rates. And then I'll quickly turn it over here. Thanks, management, for taking my question. This is Yoyo Fan from CICC. And I have two questions here. The first one is regarding the AUM breakdown. How much is from the client net asset inflow and how much from the market-to-market appreciation? And what's the regional breakdown of the client asset? The second question is about the breakdown of the current interest income. And also, would you please share more color on the impact of the interest rate cut on our net interest income? Thank you.

Thank you. I will answer your second question about the interest income breakdowns. And I will leave the first question to Daniels. uh uh the interest rate of this whole quarter is not very big. On the one hand, just like what Liv and Daniel mentioned earlier, in the third quarter, at the end of the third quarter, there are more customers who cut their warehouses and lock up the corresponding profits. So the absolute amount of limited funds compared to before is a relatively obvious improvement. So this increase in scale to a certain extent is a reduction in part of the interest rate. Looking forward, with the increase in the size of our entire client's assets and the increase in the size of our clients, I believe that the absolute amount of our entire limited fund will still have room for improvement in the future. As for the sensitivity test, compared to the one we talked about in the last Earning Call, there is no particular change. Now, in terms of the interest income breakdowns, the structure is almost similar to the patterns in the second quarters. The interest income from our idle cash roughly accounts for 40% to 45% of our total interest income. And the remaining part mainly goes to the margin financing and the stock borrowing, lending, et cetera. There is no update in terms of the sensitivity implications from the federal rate cut. In the third quarter, what we observed is that given a lot of clients locking their profit in the third quarter and the absolute amount coming from the idle cash become bigger, which partially offset the negative implications of the rate cut in the U.S.

Hello, I'm Daniel, and I'm going to answer the question about customer asset growth. In the past three seasons, more than half of Hong Kong dollars' customer asset growth has come from market fluctuations that have had a positive impact on customer assets. This is the price of these increases. The market is very strong in the third quarter. Compared to the current size, the high-end number of PORs, although there are some declines, is far above this year's level of the first quarter. From the structure of the entry fund, the Hong Kong market still contributes mainly to the entry fund. Next is the market in Singapore. We have contributed more than 10 billion Hong Kong dollars to the overseas market for three consecutive quarters. So in terms of our client assets growth in the quarter, over half of that comes from market appreciation of our client assets, especially towards the quarter end when China equities performed exceptionally well. So in the third quarter, overall net asset inflow remained very robust. So the number trended down a bit sequentially, given the high base in the second quarter, but still well exceeded the first quarter numbers. And in terms of a breakdown between different geographies, Hong Kong markets still contributed the majority of our net asset inflow, followed by Singapore. And three quarters in a row, we have seen overseas markets contributed to over 10 billion Hong Kong dollars in net asset inflow. And we're very optimistic about the sustainability of net asset inflow from overseas markets.

Thank you.

好的,非常清楚,感谢。 Thank you. Thank you. We will now take our next question. Please stand by. And the next question comes from the line of Charles Zhou from UBS. Please go ahead. Your line is now open. 管理层晚上好,首先恭喜你们取得了不错的业绩。

I would like to ask a few questions about the stock market. We know that there are two types of shareholder returns. One is the stock market and the other is the repurchase. We have noticed that at least I have seen this company for so many years, it seems that the stock market is the first time that it has been issued. In the past, the stock market was used for repurchase. I would like to ask, between the repurchase of the stock market and the stock market, How do you consider choosing which one? Are there any factors to consider? For example, some views on the stock price, etc. In the future, if our stock price is still in such a position, is it possible that in the future we will still consider this one? And then I don't know if the management level has it. It's just that the management level understands the shareholders better. Do you like the stock price or the stock price in such a situation now? This is the first question. The second is to compare the market expectations of the Visible Alpha statistics. We found that the top line is still good, with a 4% exceeding expectation. However, the net profit is basically the same as the general expectation. We also noticed that there is one that is the other cost and loss, which is about HK$131.4 million, which is still quite large. Can you please explain some of these factors? Will it still affect the future? I will translate it first. So first of all, congratulations to the management. I think it's a very solid set of results. I have a follow-up question regarding the special dividend. I think we know the shareholders, right? So you have to buy back and also the dividends. What's the rationale behind of, you know, giving the dividend now? And how do you see, you know, so do you prefer buyback or dividend going forward? So and what factors do you consider when you determine a buyback or a dividend? And what do you feel the investor will prefer, you know, currently? My second question is that compared with the visible alpha consensus, we're glad to see the top line is a 4% beat, but net profit is just largely in line. We also noticed there's one item of other costs and loss of Hong Kong dollar, 131.4 million, which is not small. So for management, would you please clarify? So could you please clarify for this item, and will this also affect your net profit going forward? Thanks.

Thanks, Charles. I will take these two questions. The first one is about the stock market. As Charles mentioned, this is indeed the first time in our history that a stock market has been issued with cash. I think from the perspective of the management or the enterprise, we will look at it comprehensively. As I mentioned earlier, from the perspective of the return, or from the perspective of cash encouragement, we will use these two corresponding methods comprehensively. We have met a lot of investors who have a specific group of investors who may have a bigger bias for cash encouragement. Because in this way, it can provide a relatively more certain fixed income. This is our return on investment. This time, we are encouraging the issuers to integrate the needs of our different shareholders to show our appreciation for the value created by our shareholders. The second item you mentioned, the others, I would like to explain it in detail. The reason for the large number of items for the others in this quarter is mainly because uh uh uh, uh, uh, uh, most of the 1.3 billion you see will be returned in the fourth quarter. So this is not a loss in terms of cash management. If we remove this factor, I believe that your calculation of our cash profit level and our overall income growth, including the market forecast, is still very decent. Now, regarding the special dividend, actually, we will use the combinations of share buyback and also cash dividends. When we touch base with our investors, we do notice there are specific group of the potential investors do care the cash dividends, which give more visibilities of the cash inflows. So going forward, actually, we will take into account the different demand from different shareholders in order to demonstrate our commitment to create a shareholder value to all of our shareholders. Then regarding the breakdown of others, the nature behind that is mainly due to the unrealized foreign exchange laws arising from the IMB appreciations versus US dollars, and also the fluctuations of Singapore dollars versus the US dollars, both of which are all non-cash items. So if we, judging by the current FX rate, the majority part of the others in the third quarter will be reversed in the fourth quarters. So if we take this, you know, the noise from the operation part, just focusing our key operating profit and also the top lines, I think the growth, the trend between the top line and the operating profit is almost in line.

Thank you very much.

Thank you. We will now take our next question. Please stand by. And the next question comes in the line of Emma Zhu from Bank of America Securities. Please go ahead. Your line is now open.

Thank you for the opportunity to ask me this question. Congratulations to the company for achieving excellent performance again in the third quarter. I have two questions here. The first question is that the management industry just mentioned that there is no plan to enter the new market next year. In the existing market, we can see that Singapore, Malaysia, and Hong Kong are all very good. This time, you also specifically mentioned in the announcement China, the United States, Canada, and Australia, in the past three seasons, have also achieved double-digit growth. I would like to ask, in some of these markets, have we recently taken some strategic measures to make sure that we see the quality of these markets improving? Or is the increase in these customer assets more important because of the growth of the US stock market this year? So I have two questions. The first question is about the strategies in your major market. So you mentioned that you don't have plans for new markets next year, so probably will focus on existing markets. Hong Kong, Singapore, Malaysia are doing well. And this quarter, you also emphasized that US, Canada, and Australia's average client assets all recorded double-digit sequential growth for three consecutive quarters. So what have you changed to the strategies in these major markets so that you see the improvement in the client quality or is it major driven by the market appreciation, especially in the US market? And the second question is that there are a lot of macro events recently, including the Fed record, the stimulus policies from China and the US election. So do you see some meaningful changes in investors trading this idea and asset allocation?

Thank you, Emma. I'm Daniel. Let me answer these two questions. I'll answer the second question about customer asset configuration, including the price-to-market ratio. Because it's similar to the question we answered at the beginning. In the end of September and the beginning of October, the share price increased significantly. As the market changed, the share price dropped, but overall, the share price increased by 3Q. In terms of the overall share price of each stock, the overall 4G performance was very good, and our customers liked the technology stocks, including virtual assets. The stock performance was very good, and it led to the overall share price to rise. So overall, compared to the third quarter, the share price of our Hong Kong stock, including the share price of Zhonggai, has been improved, but the improvement may not be so obvious, mainly because the share price of US stocks is particularly bright. Regarding the first question, this question is very big. It touches on basically all of our markets. I may answer in a simpler way. We may have more exchanges now. Actually, we think that in the current three seasons, we think that our overall business is in a very strong position. The situation of our various markets, or the entire momentum, should be in the best state in history. We also mentioned a lot of the performance of the market in this conference. I think that overall, we did not take the same strategy to fight all markets. I think that over time, And to briefly translate my two answers, maybe I'll take your second question first, given that's a little similar to the answer we gave out earlier. So in terms of our trading volume mix, We saw a surge in the percent of trading volume contributed by Hong Kong stocks and China ADRs in late September and early October. And then the percentage pulled back a bit, given the performance of China equities also pulled back. But overall, the percentage increased quarter over quarter. And in terms of U.S. stocks, the U.S. stocks have been generally performing very well fourth quarter to date, especially around U.S. elections. Some of the technology stocks and virtual asset stocks performed exceptionally well and boosted the overall U.S. stock trading volume. And to your first question, Molly touched on a number of markets, and it's hard to give a concise answer on our earnings call. I'm happy to chat more offline. But just to summarize, I think just over time, we have a better understanding of our business. We have a better understanding of our capabilities. And also, we've developed a better understanding of each and every one of these markets and the client demands. So we don't have a one-size-fits-all approach towards all of our seven markets. But instead, we focus on learning more about users, We develop unique product pipelines. We have different marketing messages. We emphasize on different unique selling points. And we have different client operations strategies. So overall, I think we'll continue to iterate based on our understanding of each of these seven markets.

Thank you.

Thank you.

As there are no further questions, I would now like to hand back to Daniel Yuan for any closing remarks.

That concludes our call today. On behalf of the Food2 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.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.