Shares in iFast opened near the 52-week lows last seen in March following the release of the group’s 1QFY2022 results last Saturday.
As at 9.58am, shares in iFast are trading 35 cents lower, or 6.18% down, at $5.31.
Formerly one of the best-performing stocks on the Singapore Exchange, shares in iFast had reached a 52-week high of $10.10 per share prior to the release of its 3QFY2021 results in October. By mid-March, iFast shares had plummeted to a 52-week low of $5.23.
The group’s performance for 1QFY2022 ended March 31 signals a “weak start to the year”, says iFast itself, with lower net revenue and higher operating expenses causing net profit to decline 34.9% y-o-y to $5.74 million.
Citi continues warnings
Citi Research analysts Tan Yong Hong and Robert Kong label iFast a “high risk” stock. In an April 25 note, Tan and Kong are maintaining “sell” on iFast, with a target price of $5.20.
See also: 'Weak start to the year' as iFAST 1QFY2022 net profit falls 34.9% y-o-y
“We see downside risks to share price on potential downside revisions to earnings and valuation multiples headwinds as real yields continue to climb. 1QFY2022 results have displayed further weakness in net platform margins and AUA growth momentum as flagged in our preview note,” write the Citi analysts.
Tan and Kong also note that consensus estimates place FY2022F PATMI growth at 16%, while Citi holds a measured 1%.
Citi analysts first sounded warnings in January, when iFast announced plans to acquire a UK bank.
See also: 'Momentum faints' for iFAST as FY2021 results miss expectations, but look ahead: analysts
BFC Bank was acquired on March 28, and the bank has been renamed iFast Global Bank. To fund the acquisition, iFast announced on Jan 11 that it had raised $105 million via a placement of 14 million new ordinary shares to institutional and accredited investors.
iFast Global Bank is expected to contribute $4.0 million in losses to the group in 2022. “The group is, however, targeting to achieve profitability for iFast Global Bank starting 2024,” says iFast.
“Excluding FY2022F BFC Bank losses from our FY2022F estimates, $5.7 million earnings make up just 16% of our full-year expectation,” write Tan and Kong.
iFast has also updated the targeted revenue and PBT for its overall Hong Kong business. iFast now aims to achieve PBT of more than HK$100 million ($17.5 million) in 2023, HK$250 million in 2024 and HK$500 million in 2025.
Tan and Kong write: “While management has updated the HK earnings guidance, we reiterate that the HK eMPF project is a fixed seven- to 10-year project, which we value separately via a discounted cash flow (DCF) [model].”
UOBKH halves target price
UOB Kay Hian Research analyst Clement Ho notes a sequential slow down in AUA from Singapore, iFast's key market. He also downgrades iFast to "hold", nearly halving his target price to $5.17 from $9.84.
See also: Citi reiterates 'sell' on iFAST as share price plummets to eight-month low
"AUA declined sequentially to $18.63 billion (up 15.6% y-o-y and down 1.9% q-o-q), as key market Singapore (71% of overall AUA) saw redemptions mainly from the B2C segment due to the volatile global equity and bond markets," writes Ho in an April 25 note.
Ho adds: "We have changed our valuation methodology from DCF to PE, due to the slowdown in iFast’s main driver: AUA... We remain sanguine post-2023 when valuation is expected to narrow to 30.2x, supported by a three-year earnings CAGR of 48.7% for FY2022F-FY2025F."
DBS maintains optimism
Meanwhile, DBS Group Research analyst Ling Lee Keng remains upbeat on iFast, as “growth initiatives are intact despite near-term hiccups”.
In an April 25 note, Ling is maintaining “buy” on iFast, though with a lower target price of $8.75 from $10.85 previously.
“We maintain our positive view on iFast on the back of the strong growth momentum from 2023, propelled by the Hong Kong business. There is room for AUA to grow further. 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.
The group will be holding a briefing and annual general meeting on April 25.
Photo: Albert Chua/The Edge Singapore
