With iFAST's share price beating all other stocks on the Singapore Exchange (SGX) by surging 160% year-to-date and more than 600% in the last 12 months, DBS Group Research sees strong growth momentum ahead for the company. 

In a May 28 note, DBS Group Research analyst Ling Lee Keng is maintaining “buy” on the financial services company, with a raised target price of $10.55 from $7.64 previously. 

“We maintain our positive view on iFAST on the back of the strong growth momentum ahead. Earnings for FY2021F/FY2022F are expected to grow 54%/31%,” notes Ling. 

See: iFAST's Lim shrugs off the competition as he gears up for adjacent growth

With its growing and deepening range of products and services, iFAST is well poised to capture more market share in Singapore, where its share is just 10% of the approximately $128 billion in assets under management (AUM) of the collective investment schemes in Singapore, says Ling. 

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“We expect assets under administration (AUA) to grow by 30% in FY2021F and 20% each in FY2022F and FY2023F, outpacing industry growth of approximately 10%,” says Ling.

The net inflow of client assets saw a quantum leap in 2020, surging more than threefold, and more than doubling in 1QFY2021. The number of customer accounts opened also increased 28% y-o-y to over 590,000 accounts as at March 31, 2021.

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“iFAST’s net earnings growth of 49% for FY2023F is partly boosted by maiden contributions from the eMPF project,” says Ling. 

On Jan 30, iFAST announced its successful tender for the eMPF platform project in Hong Kong. iFAST has partnered PCCW Solutions as its prime subcontractor for a category that includes MPF scheme operation services, transformation services and user delivery services. 

“We assume that the group is able to get a cut of the fee income, while contribution starts from 2023 onwards. As at September 2020, MPFA had net assets worth HK$1,021 billion. Based on a 20-basis point calculation, this works out to approximately HK$2 billion ($351 million) per year,” writes Ling.

“Assuming that iFAST gets a 3-5% share of the fee income, contribution to bottom line could be in excess of $10 million in the medium term. We have included a $10 million contribution from the eMPF project, the lower end of our scenario analysis, to our FY2023F earnings projection,” Ling adds.

With its scalable platform business model, iFAST has already obtained operating leverage. Since 1QFY2020, growth in profit was substantially higher than the growth in revenue. This should drive margins higher going forward, notes Ling.

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iFAST is an Internet-based investment product distribution platform. As at end-December 2020, the group offered over 7,800 funds from over 270 fund houses, over 1,400 direct bonds, stocks and ETFs (Singapore, Hong Kong and US stockbroking capabilities), as well as discretionary portfolio management services. 

More than 460 financial institutions and other corporations, and over 9,900 wealth advisers are using iFAST’s B2B platforms. More than 550,000 customer accounts have been opened across the five markets the group is operating in.

As at 3.08pm, shares in iFAST are trading 45 cents higher, or 5.6% up, at $8.48.