Results released on Oct 23 show that 3QFY2021 ended Sept 30 net revenue rose 32.6% y-o-y to $30.3 million, while EBIT and PATMI grew at a slower pace of 22.4% and 23.4% to $9.1 million and $7.5 million respectively, owing to lesser government grants and a net investment loss from debt instruments.
A higher interim dividend of 1.3 cents was declared, compared to 0.8 cents in 3QFY2020.
In an Oct 26 note, UOB Kay Hian Research analyst Clement Ho is maintaining “buy” on iFast with a target price of $11.50, which represents an upside of 24.9%.
“iFast has proven it is able to capture the growing pie of the wealth management industry in its key markets across Asia, driven mainly by the shift towards digitalisation. The longer-term structural dynamics are favourable to iFast as the percentage of managed wealth in Asia grows. This will be driven mainly by China, as financial markets there continue to open and help spur growth in the Asian wealth management industry,” writes Ho.
See: iFast 3Q21 earnings growth rebounds from previous quarterly dip, outlines Five-Year Plan
iFast has several new growth avenues ahead, Ho adds. “These include its Malaysian stockbroking service on the FSMOne.com investment platform to help strengthen the group’s position as a multi-asset investment platform, and help the company move towards its objective of becoming a holistic fintech platform.”
iFast also has in Hong Kong the development of its eMPF pension platform. “Unfortunately, financial details still cannot be disclosed at this stage. However, iFast did provide its financial targets for 2024-25 for the overall Hong Kong market.
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iFast aims to achieve 2024 and 2025 gross revenue of more than HK$1 billion and HK$1.5 billion ($0.17 billion and $0.26 billion) respectively, compared to 2020’s HK$252 million; and 2024 and 2025 net revenue of more than HK$800 million and HK$1.2 billion respectively, compared to 2020’s HK$107 million.
The company also targets 2024 and 2025 PBT margin of more than 15% and 33% respectively, compared with 2020’s 30%.
“To recap, the project has a two-year implementation period to be completed by end-2022, and a seven-year operation/maintenance period thereafter,” writes Ho.
Additionally, iFast is leading a consortium which has submitted its bid for a Malaysia digital bank licence. Results for the five new licenses should be released by Bank Negara Malaysia in 1Q2022. iFast will own a 40% stake in the partnership, which includes Malaysian partners Koperasi Angkatan Tentera Malaysia, THZ Alliance and Lee Thiam Wah, as well as international partner Yillion Fintech.
Likewise, DBS Group Research analyst Ling Lee Keng is maintaining “buy” on iFast with a target price of $12.93.
“We maintain our positive view on iFast on the back of the strong growth momentum ahead, propelled by the Hong Kong business from 2024 onwards. We expect more room for AUA growth. iFast is well poised to capture more market share in its key market Singapore, where its share is just 10% of the approximately $128 billion in AUM of the collective investment schemes,” writes Ling in an Oct 26 note.
Ling notes that trading activities were generally more subdued in 3QFY2021 compared to the earlier part of 2021. “For 9M2021, net profit accounts for 72% of our FY2021 projections, broadly in line as 2H2021 tends to be stronger based on the trend in the last two years, accounting for about 60% of the full year contribution. 3QFY2021 net profit contributed to 23% of our FY2021 numbers.”
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On the other hand, Citi Research analyst Tan Yong Hong holds a contrarian view, recommending investors to “sell” iFast as he sets a target price of $7.50.
iFast’s 3QFY2021 results missed consensus estimates due to slowing AUA growth momentum and ongoing platform margins pressure, writes Tan in an Oct 25 note.
“iFast has enjoyed strong net AUA inflows but we believe that could be at risk post-quantitative easing (QE) tapering,” says Tan.
iFast’s share price has risen more than 800% since mid-2020, notes Tan, and he thinks the market is pricing in too much upside from the upcoming HK eMPF project tender. “We estimate the market has price in about $3 upside from this project, but our bottom-up approach suggests just 90 cents.”
As at 1.26pm, shares in iFast are trading 2 cents lower, or 0.22% down, at $9.19.
Photo: Albert Chua / The Edge Singapore
