**Long post ahead**
This post does not constitute to an investment recommendation. Please do your DD.
Disclaimer: I have a long position on Tiger
I feel like no one here really know where to access the earning call transcript... Even I just found it recently. Just sharing it...link at the end of this post
Positives from the earning call:
1) Internationalisation strategy paying off - this strategy just started last year (if you think about it, Tiger becomes more well known only from 2020 onwards). User base increased to 1.65 million, ~100% yoy. Of new additions in Q2 quarter, 60% comes from offshore accounts outside of China. Now, international accounts are 40% of total customer base and growing... Good diversification outside of China
2) Fear surrounding US-listed ADR underwriting. What this means that though ADR underwriting may be on hold, Tiger Brokers would get MORE benefits when US-listed ADR think of listing in HK as a safeguard. This will increase other revenue portion for Tiger. Some clients Tiger has helped to underwrite previously include Bilibili and Netease.
3) Increasing self-cleaning capabilities. Based on local regulation, if the client is trading Singapore Stock, the client's asset needs to be hold at SGX clearing member. Back in Q2, Tiger was not a SGX member yet, so they have to pay third-party custodian fee for each clients to open account with them and their clearing expense increase a lot. As we can see, Tiger has recently gotten self clearing capability for SG market. Therefore, clearing expense will be offset going forward (SG clearing cost them USD 2 mn per quarter in 2Q before they got the SGX membership)
4) Opex such as marketing expenses. Yes, it increase drastically due to referral promotions etc but the management has guided 3Q21 marketing expenses to be lower than 2Q21
5) Increasing net interest income - more customers mean more margin financing
Negative:
1) Higher cost of acquisition for new users - for international users, this increased from USD 130 to USD 160 per user and payback period increase from 2 quarters to around 4-6 quarters. However, this can be managed if customer retention rate is high and there's more upselling of products
2) Commissions has decreased (in terms of 1Q21 vs 2Q21) due to more negative market sentiments, resulting in lower trading volume. However, in July and August, management has guided for higher commissions due to shift towards higher fee products such as cash equity
All in all, I think 3Q results seem to be more favourable than 2Q results due to higher user growth, use of higher margin products and potential for higher other revenue (and so long as the Company controls overrun in costs). Perhaps, the Company can also do better in disclosure and explanation for some increase in cost such as employee cost (they explain it as increase in headcount but there's no headcount breakdown and no quarterly share-based compensation breakdown). But this is really a high risk high reward company. Invest only what you can afford to lose!
Won't be replying to any comments as I don't usually look at my postings.
Link to earning call transcript below:
https://www.google.com/amp/s/seekingalpha.com/amp/article/4454585-up-fintech-holding-limited-tigr-ceo-wu-tianhua-on-q2-2021-results-earnings-call-transcript
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