iFast Corp is well-poised to capture more market share in Singapore, even as its assets under administration (AUA) in Singapore grew 52.8% y-o-y and 18.0% q-o-q to a record high of $10 billion, says DBS Group Research analyst Ling Lee Keng.
“With its highly scalable business model coupled with a 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 AUM of the collective investment schemes in Singapore, as well as in China, where there are ample opportunities,” writes Ling in a Feb 8 report.
Ling is recommending “buy” on the financial services company, with a raised target price of $7.64 from $6.40.
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“We maintain our positive view on iFast on the back of the strong growth momentum ahead, driven by the acceleration of FinTech services adoption pace. The record-high AUA and FY2020 results attest to this trend,” Ling adds.
As at Dec 31, 2020, AUA surged 44.5% y-o-y to $14.45 billion. Thanks to AUA growth, iFast’s earnings for the 4QFY2020 was up 127.5% y-o-y to a quarterly record of $6.83 million. Revenue in the same period was up 41.6% y-o-y to $48.9 million.
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“On a full-year basis, FY2020 net profit jumped 122.3% to $21.2 million while revenue surged 35.5% to $169.9 million, in line with our forecasts,” says Ling.
Ling writes that iFast's AUA growth will outpace the industry. “AUA for iFast grew at a 2-year CAGR (FY2018-FY2020) of 34%, vs. 10% over FY2017-FY2019 for the industry. With the expanding range of products and services, coupled with the boost from Covid-19 that helped to accelerate the rate of digital adoption, we expect AUA to grow by 30% in FY2021F and 20% in FY202F.”
See: iFast reports record quarterly earnings of $6.83 mil, AUA of $14.45 bil at all-time-high
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A final dividend per share (DPS) of 1 cent was declared, bringing full-year DPS to 3.3 cents, compared to 3.15 cents in FY2019, implying a payout ratio of 42%, vs. 89% in FY2019. Going forward, the group expects to declare a gradual increase in DPS, notes Ling.
That said, while iFast enjoys strong growth in its key market of Singapore, its China operations are still loss-making, and may remain so for at least a year, notes Ling. “Key market Singapore registered strong growth in net earnings of 114% y-o-y for FY2020. Continued losses seen in the China operation, with net loss of $4.9 million, similar to FY2019. We expect this trend to continue at least till FY2022F or beyond.”
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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: Singapore, Malaysia, China, Hong Kong and India.
As at 11.38am, shares in iFast are trading 7 cents higher, or 1.13% up, at $6.28.