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iFAST Corp bags best returns, gears up for long-term growth

Samantha Chiew
Samantha Chiew12/11/2020 07:00 AM GMT+08  • 7 min read
iFAST Corp bags best returns, gears up for long-term growth
iFAST Corp bags best returns, gears up for long-term growth
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At 52 years old, Lim Chung Chun is still cycling and running marathons. He explains that speed, to him, is not the most important thing. Instead, it is the endurance and determination to complete the race that counts, and not giving up when the going gets tough.

Lim’s determination and endurance is not only confined to the tracks, but is also seen in the business arena. “When you run a business, you have to look at the long term — what is going to happen in the next five to 10 years. If you take a short-term perspective, like just trying to maximise profit for the current year, you may lose out on long-term investment opportunities, like investing in technology,” says the co-founder, chairman and CEO of iFAST Corporation, a wealth management FinTech platform.

The way Lim describes it, running a business is about endurance for the long term. It is also about having the unwavering belief that the company as a whole can get through the tough times together.

And it is this formula that has led to the success of iFAST. The company is being recognised for achieving the best returns to shareholders in the financial sector for this year’s Centurion Club Award organised by The Edge Singapore.

Through the rough seas

As an analyst previously, Lim loved his line of work. But he felt there was an opportunity out there to be grasped with the Internet boom during the early 2000. So, what started out as a casual lunch with iFAST’s cofounder Moh Hon Meng and some management consultants, turned out to be the start of an idea about Moh and Lim coming together in 2000 to launch Fundsupermart.com (FSM), an Internet platform that focused on providing self-directed investors with easy access to unit trust investments.

Back then, the sale of unit trusts was mainly controlled by big players such as banks and insurance companies, and also via their offline channels. Online distribution was still fledging then. Lim and Moh saw a chance to bring the unit trust transactional process online through FSM, to leverage the up-and-coming Internet trends back then. It helped, of course, that the world was enraptured by the dotcom mania, and FSM very quickly gained recognition for its business model.

Besides serving self-directed investors, the group launched its B2B iFAST platform in 2002 to cater to the specialised need of financial advisory companies, financial institutions and banks that are focused on serving adviser-assisted investors.

For well over a decade, iFAST was predominantly a unit trust investment platform. However, in recent years, it has been broadening the range and depth of the investment products and services on board its platform to provide investors with a comprehensive suite of wealth management solutions. It is also now present in five markets — Singapore, Hong Kong, Malaysia, India and China — offering access to over 11,000 investment products.

But getting to where the company is right now has not been smooth sailing.

Lim recalls the ups and downs he had, especially during “scary times” like the SARS pandemic in 2003 when the regional economic went into a sharp plunge, and the Global Financial Crisis of 2008-2009 when there was no way of telling which big financial institution might be the next to go under.

But having been through all that, iFAST as a company has emerged stronger and thus, has been able to ride the Covid-19 wave smoothly.

“We are facing Covid-19 now from a position of strength. We are profitable, have excess cash and are listed. So, during this period, we have managed to thrive and the business has grown,” says Lim, who expects the company to do well this year, considering its past investment in building a strong integrated digital wealth management platform before the pandemic struck.

With all of the group’s services already online, Covid-19 only helped to speed up the rate of adoption of iFAST’s investment products for both its business and consumer clients. “Digitalisation is a trend that would have happened anyway, Covid-19 or not. All the pandemic did was shortened the time,” says Lim.

iFAST’s growth during the pandemic was apparent when it reported its results for 1HFY2020 ended June, which saw earnings more than double to $8.2 million from just $4.0 million a year ago. This was on the back of a 33.2% y-o-y increase in revenue to $77.0 million.

But even as lockdown measures are gradually easing, investors and financial advisers have already come to realise the convenience and ease of using iFAST’s digital platforms.

Hence, in its latest results for 3QFY2020 ended September, the growth momentum continued as revenue increased by 33.3% y-o-y to $45.0 million and earnings came in 150.6% higher than the previous year at $6.2 million.

Yet another positive indicator, iFAST’s assets under administration (AUA) in 3QFY2020 grew by 12.9% q-o-q, reaching a new record high of $12.59 billion as at end-September, despite some depreciation of the US dollar during the period.

This was on the back of new record quarterly net inflows of $1.07 billion in client assets on the group’s platforms in 3QFY2020. Compared to 3QFY2019, the group’s AUA rose 33.3% y-o-y. On the back of iFAST’s stellar 3QFY2020 results, DBS Group Research is positive on the stock and has kept its “buy” recommendation on iFAST with an increased target price of $3.96.

The way DBS analyst Ling Lee Keng sees it, iFAST is now reaping the fruit of its labour of the last few years, when the company has been expanding the breadth and depth of the products and services it offers.

Next in line

Lim notes that iFAST’s Singapore, Hong Kong and Malaysia markets are now profitable, while India and China are still in the red, but are showing promising growth. China, in particular, is “a market we should not ignore”, he says.

“China will one day become the biggest market in the world for wealth management. I reckon this could be some time in the coming decade, especially with the Chinese companies and government having large global ambitions to expand their businesses outside of China,” says Lim.

Lim of course is not the only businessman eyeing the big market potential in China; there is going to be plenty of competition. Nevertheless, he is upbeat and eager to gun for his fair share. “We will take a longer time to turn profitable in China. But this market is worthwhile going after, as the rewards will be far bigger in the long run,” says Lim, who also shared that iFAST China was the first foreign company in China to have successfully obtained the licence for third-party fund distribution.

Although it would have been easier to enter the market via a partnership with a local firm, Lim thought to try to enter the market alone. “It was harder, but that does not mean it cannot be done,” he says.

Lim has big plans for its China business, but is taking things one step at a time, focusing more on growth instead of profits.

“We are not rushing to break even yet, but we are trying to ensure that we grow from where we are now, while taking into account the true potential of the market. We are also watching our bottomline, we are not simply burning cash,” says Lim.

On the whole, iFAST is dedicated to continuously improving its range of solutions and services, including the introduction of digital banking services to further add value to global investors, wealth advisers and corporates using its platforms.

“The Internet has changed the global business landscape, with people from all over the world being able to connect with one another instantly. And now it is the time for financial services and FinTech to serve the world, instead of being confined to a single location,” says Lim.

Since banking and wealth management are interlinked, iFAST will continue its pursuits for a digital bank licence in Singapore and other jurisdictions.

Lim is certainly gearing up to prepare himself and iFAST for more races to come.

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