iFAST Corporation Ltd: A Leading Contender in Financial Services

iFAST Corporation Ltd’s 4Q24 performance exceeded expectations, reporting a PATMI of S\$19.3 million, marking a significant growth of 15% quarter-on-quarter (qoq) and 46% year-on-year (yoy). This result was 10% above CGS International’s estimates and 17% higher than Bloomberg consensus. Full-year FY24 net profit constituted 103%/104% of CGS International’s and consensus’ projections, respectively.

Key Drivers Behind Performance

The stabilization of net revenues across geographies, combined with reduced ePension-related operating expenditures (opex), drove this positive result. Additionally, a lower-than-expected tax rate of 21% in FY24 (versus the anticipated 23%) contributed to the earnings beat. Management declared an interim 1.6 Singapore cents dividend per share (DPS) for 4Q24, bringing the full-year FY24 DPS to 5.90 Singapore cents, translating to a payout ratio of approximately 26%. Management aims to maintain a similar payout ratio in FY25.

Growth Projects in Progress

iFAST is progressing with its ePension project in Hong Kong, which has surpassed management’s earnings guidance. The smoother-than-expected onboarding of trustees has bolstered operating margins. Meanwhile, the Occupational Retirement Scheme Ordinance (ORSO) contributions are now projected to commence by 2Q25, with system testing underway. Preparations are also ongoing for a collaboration to launch a pension business in Macau, where the addressable market size (AUA) is estimated at HK\$293 billion (approximately S\$51 billion).

iFAST Global Bank Performance

iFAST Global Bank (iGB) achieved breakeven in 4Q24, driven by rising net interest income (NII) as deposits reached S\$1 billion (compared to S\$359 million in 4Q23). Management targets profitability for iGB in FY25, with earnings likely to be driven by NII and peripheral fees, such as forex.

Analyst Recommendation

CGS International reiterates its “Add” recommendation for iFAST, with a target price (TP) of S\$9.50, reflecting a 20.7% upside potential from the current price of S\$7.87. The primary catalysts for re-rating include faster onboarding of ePension trustees and the confirmation of ORSO project partners. Risks include potential delays in ORSO implementation and labor shortages.

Singapore Exchange (SGX): A Steady Performer

Singapore Exchange (SGX) is recognized as a reliable performer with a “Hold” recommendation and a target price of S\$13.20. SGX’s current price stands at S\$13.47, indicating a slight downside.

Key Financial Metrics

SGX’s forward price-to-earnings (P/E) ratio stands at 24.0x for FY24 and 23.8x for FY25. Dividend yields are estimated at 2.6% and 2.7% for FY24 and FY25, respectively. Despite its consistent performance, market sentiment towards SGX remains neutral due to limited growth catalysts.

Bursa Malaysia: Positive Outlook

Bursa Malaysia is rated as an “Add” with a TP of MYR11.30, reflecting a significant upside from its current price of MYR8.25. Bursa Malaysia shows robust fundamentals and growth potential.

Key Financial Metrics

The company’s forward P/E ratios are 21.8x for FY24 and 21.0x for FY25. Dividend yields are projected at 4.3% and 4.5% for FY24 and FY25, respectively. Bursa Malaysia’s 12.8% three-year EPS compound annual growth rate (CAGR) highlights its steady growth trajectory.

ZhongAn Online P&C Insurance: High Growth Potential

ZhongAn Online P&C Insurance has not been rated (NR). The company’s forward P/E stands at 32.4x for FY24 and 20.1x for FY25, reflecting high growth expectations.

Highlights

The company’s three-year EPS CAGR is unavailable, but its significant reduction in forward P/E from FY24 to FY25 signals a potential for robust earnings growth. Dividend yields remain minimal at 0.0% for FY24 and 1.4% for FY25.

Charles Schwab Corporation: A U.S. Powerhouse

Charles Schwab Corporation is a U.S.-based financial giant with a forward P/E of 27.4x for FY24 and 19.6x for FY25. The company’s three-year EPS CAGR stands at an impressive 27.0%.

Key Metrics

Charles Schwab’s dividend yield is modest at 1.2% for FY24 and 1.3% for FY25. The company’s strong growth prospects are reflected in its robust valuation multiples.

Interactive Brokers Group: A Consistent Performer

Interactive Brokers Group (IBKR) has a forward P/E of 32.9x for FY24 and 31.0x for FY25, showcasing consistent growth. The company’s three-year EPS CAGR is 11.4%.

Financial Outlook

IBKR’s dividend yield is limited to 0.4% for both FY24 and FY25, signaling a focus on reinvestment rather than shareholder payouts. The company is well-positioned to capitalize on market opportunities.

LY Corp: Rising Star

LY Corp is recognized as a rising player in the financial sector. The company’s forward P/E ratios are 33.2x for FY24 and 22.3x for FY25, with a three-year EPS CAGR of 14.3%.

Growth Indicators

Dividend yields are estimated at 1.1% for FY24 and 1.2% for FY25. LY Corp’s robust valuation metrics and growth trajectory make it a compelling investment prospect.

Conclusion

The financial services sector continues to offer diverse investment opportunities, with iFAST Corporation Ltd standing out as a key player with significant growth potential. While Singapore Exchange and Interactive Brokers demonstrate stability, companies like Bursa Malaysia and Charles Schwab present attractive growth stories. ZhongAn Online and LY Corp also showcase strong potential, albeit with varying levels of risk and return. Investors are advised to consider these insights carefully and align their investment strategies accordingly.