A key beneficiary of booming Asia wealth

We initiate coverage on UP FinTech Holding (known as Tiger Brokers) at Buy. It is a leading online broker, providing brokerage services, ESOP management, IPO distribution, and wealth management services, for retail and corporate clients. The company began by serving mainland China population’s overseas investment demand, and later expanded into more markets (Singapore, US, Australia, New Zealand, HK). Singapore contributes \(>55\%\) >55% of its funded clients and CA client assets currently. We like Tiger as 1) it is a key beneficiary of the booming Asia wealth market, 2) it offers competitive products and services in the key markets; 3) its business model has high operating leverage, and has achieved improved profitability, 4) its 4Q24/2025E earnings are likely to beat consensus significantly; and 5) its introducing broker business could drive further revenue upside.

PO based on 16x 2025 P/E and above-consensus estimates

Our PO of USD8.66 is based on a target P/E multiple of 16x on our 2025E earnings, in line with its historical average valuation. We forecast EPS to grow at 21% CAGR in 2024-27E. Our 4Q24E/2025E GAAP earnings are 48%/55% above VA consensus at USD28mn/USD95mn and non-GAAP earnings are 41%/42% above VA consensus at USD31mn/USD104mn, partly due to a low base of its earnings and under-coverage of the stock by sell-side analysts. We think the market may be underestimating Tiger’s income-generating ability, cost discipline and operating leverage.

Risks and challenges

1) Unfavorable market conditions will suppress trading and margin financing activities, but continued client growth and asset inflows could mitigate/offset the impact; 2) Fed rate cuts will drag net interest income, but could be offset by more market activities in a lower-rate environment; the bear-case scenario is a recession-driven Fed rate cut; 3) intensifying competition will lead to lower commission rate, or higher selling and marketing costs; 4) if earnings miss our above-consensus expectations, there could be downside risk to our PO; and 5) China further tightens regulations and doesn’t allow Chinese-background brokers to serve existing mainland China clients, which we see as unlikely as it will just push these clients to foreign brokers.