Leading online brokerage with a focus on US equities & strong tech capabilities

UP Fintech (TIGR) is a leading integrated online brokerage company offering a diverse range of investment products across multiple markets. It serves investors in Singapore, New Zealand, Australia, and the United States, and has recently

expanded into Hong Kong. It has a strong focus on US equities, which account for 85% of trading volumes. Strategically positioned in key APAC hubs, TIGR is wellplaced to capitalize on the growing demand for international investments. As of end-September 2024, TIGR has over 1mn paying clients.

Earnings growth fueled by US equities momentum and market expansion

With new capital raised recently, we believe TIGR is poised for further growth, driven by sustained momentum in US equities and the ramping up of activities in Hong Kong, as well as the following factors:

• Expanding client base: We expect new client acquisition to average around 149k per year from 2024E to 2026E, up from 116k in 2022-2023 (a 12% CAGR), due to the company's planned increase in investments in Hong Kong, which offers a higher ARPU than other markets.

• Trading momentum: We expect trading volumes to expand at a 15% CAGR over 2024E-2026E, driven by client base expansion and an increase in client assets with continuous fund inflows amid a steady improvement of market sentiment.

• Expanding MFSL scale: A large proportion of the new capital raised will be used to support the expansion of the company's Mutual Fund Service License (MFSL) balance. We project a decent 33% CAGR increase in the MFSL average balance over 2024E-26E.

We believe TIGR's margin has significant potential to improve due to enhanced operating leverage and operating efficiencies driven by TIGR's innovative technology. We expect non-GAAP attributable profit to increase from US$63mn to US$95mn at a 25% CAGR over 2024E-2026E.

Initiating coverage with a Buy rating and a target price of US$9.40

We initiate coverage on TIGR with a Buy rating and target price of US$9.40. We have adopted a probability-weighted valuation framework with our base case derived from a DCF valuation. We have assigned a heavier weight to our base case and equal consideration for both bear and bull scenarios to reach our target P/E. This balanced approach reflects our cautious optimism towards US equities and Hong Kong market activities, acknowledging potential risks while maintaining a slightly bullish outlook.Our target price corresponds to a 21.5x FY25E P/E, which is near the historical three-year average.

Risks:

Key downside risks: (1) regulatory risk from tightening capital controls; (2) failure to meet the regulatory requirements for the licenses in the markets where it has a presence; (3) increasing stock market volatility; and (4) increasing geopolitical tension.