Date of Report: October 29, 2024
Broker: UOB Kay Hian Private Limited
Company Overview
iFAST Corporation (iFAST) is a fintech wealth management platform based in Singapore, providing a broad range of investment products and services to financial advisory firms, institutions, banks, internet companies, multinational corporations, and retail and high-net-worth investors across Asia. The platform specializes in wealth management and investment distribution services.
Stock Information
- Share Price: S$7.65
- Target Price: S$8.17 (revised from S$8.03), reflecting a potential upside of 6.8%
- Market Cap: S$2.279 billion (US$1.723 billion)
- Bloomberg Ticker: IFAST SP
- Major Shareholders:
- Lim Chung Chun (CEO) – 20.0%
- Singapore Press Holdings – 11.9%
- Lim Wee Kian – 6.6%
3Q24 Financial Performance
- Revenue: S$99.1 million, up by 49.7% year-over-year (yoy) and 5.7% quarter-over-quarter (qoq)
- Net Revenue: S$64 million, reflecting a 53.4% yoy and 4.2% qoq increase
- PATMI (Profit After Tax and Minority Interests): S$17 million, marking a significant 97% yoy and 5% qoq increase
- Net Revenue Margin: 64.5% in 3Q24, with a 65.8% average over the 9M24 period
- Dividend: Higher third interim dividend proposed at 1.5 Singapore cents per share (up from 1.3 cents in 3Q23)
Key Business Segments and Growth Drivers
AUA and ePension Contributions
- Record High AUA: Assets under administration (AUA) reached S$23.62 billion by the end of September 2024, with a 24% yoy and 6% qoq increase.
- Hong Kong (HK) ePension Division: Continues to drive growth, contributing to the steady rise in recurring revenue, which now comprises 83.5% of net revenue for 9M24.
- Net Inflows: Achieved S$0.81 billion net inflows, the highest since 2021, indicating growing client interest and platform traction.
Hong Kong Operations
- Steady Performance: HK’s net revenue of S$28.6 million and pre-tax profit of S$13.3 million were consistent qoq, with AUA up 3% qoq and 17% yoy to S$2.76 billion as of September 30, 2024.
- Trustee Onboarding: The HK ePension division is still onboarding trustees, maintaining steady contributions to overall revenue and profits.
Strategic Progress in Global Operations
iFAST Global Bank (iGB) Developments
- Deposit Growth: iGB’s customer deposits grew by 25% qoq to S$805.6 million in 3Q24.
- Revenue Increase: Gross revenue for iGB increased by 32% qoq to S$6.1 million, driven by its Digital Personal Banking (DPB) division and new fixed-term deposits.
- Expansion of Customer Base: The Digital Transaction Banking (DTB) division extended its customer reach to brokerages across the UK and Europe and launched a new payments and banking platform.
China Operations
- Narrowing Losses: Pretax losses reduced to S$1.38 million in 3Q24, an 18% reduction qoq and 21% reduction yoy, due to cost control measures.
Future Projections and Strategic Initiatives
Earnings Forecast and Upside Potential
- AUA Growth Projections: The AUA forecast for 2024 has been revised upward, with a projected 25% yoy increase, aiming to reach S$25 billion.
- Hong Kong ePension Guidance: The HK ePension segment has already reached 94% of iFAST’s 2024 profit before tax (PBT) guidance, and future onboarding is expected to sustain growth.
- ORSO Platform: The upcoming launch of the Occupation Retirement Schemes Ordinance (ORSO) platform in 1Q25 will further boost HK’s AUA. Contributions to both top-line and bottom-line revenue are anticipated, contingent on the onboarding of scheme partners.
Earnings Revisions and Valuation
- Earnings Forecasts: iFAST’s earnings forecasts for 2024-2026 were raised by 2-5% to reflect anticipated AUA growth and stable HK ePension contributions.
- Valuation: iFAST’s target price is set at S$8.17, pegged to a 25x price-to-earnings (PE) multiple for the 2025 forecast. This valuation is approximately 0.5 standard deviations below iFAST’s historical mean PE, as current valuations are considered high relative to industry peers.
This comprehensive summary provides an overview of iFAST Corporation’s recent performance, strategic direction, and financial outlook as of October 29, 2024, based on UOB Kay Hian’s analysis.
