Deep Dive into a Fintech Investment Platform

iFAST Corporation Limited (“iFAST”) is a wealth management Fintech platform, with assets under administration (“AUA”) of S$18.38 billion as at 30 September 2021.

Incorporated in the year 2000 in Singapore and listed on the SGX-Mainboard in December 2014, the Group also has a presence in Hong Kong, Malaysia, China and India.

As at end September 2021, the Group offers access to over 14,000 investment products including over 9,400 funds from over 280 fund houses, over 1,500 bonds, stocks and ETFs listed on the Singapore, Hong Kong, US, Malaysia, China A stock exchanges, as well as services including online discretionary portfolio management services, research and investment seminars, Fintech solutions, and investment administration and transaction services.

Key Statistics

Past Financial Performance

For the trailing 12-month period, iFAST’s revenue grew by more than 20% to S$209.55 million. The strong jump in its topline was boosted by both its Business-to-Customer and Business-to-Business segments due to a higher AUA.

With a higher gross profit margin and a slower increase in operation costs, iFAST’s profit after tax surged by more than 40% to S$30.04 million in the same period.

Consensus Estimates

Based on the analyst consensus estimates, iFAST has a “Buy” recommendation with a mean target price of S$9.26. This translates into a potential upside of 49.9% based on the share price of S$6.18.

Over the 3 months, analysts have re-rated iFAST’s target price downwards by 13.26% and has reduced their forecasted revenue and profitability by 13.77% and 2.98% respectively. The downgrade was mainly contributed to the ongoing competition within the industry, which could have an impact on its future financial performance.

Latest Development

Strengthening iFAST’s Senior Management Team

In the announcement dated 31 January 2022, iFAST has announced a series of changes to its senior management team.

• Mr. Eddie Pang Jian Jong (“Mr. Pang”) will assume the position as Group Chief Risk Officer from his current position of Chief Risk Officer of Singapore.
• Mr. Jimmy Lim Kian Thong (“Mr. Lim”) will assume the position as Group Chief Financial Officer in place of Mr. Leung Fung Yat David who was re-designated as Group Finance Director.

Mr. Lim will be supported by two Group Finance Directors, including Mr. Leung Fung Yat David and Ms. Wynnie Wu Yun. Mr. Leung Fung Yat David has been with the Group for over 15 years, while Ms. Wynnie Wu Yun has been with the Group for more than 13 years. Mr. Lim is currently the Deputy Chief Operating Officer of the Group.

With this latest reshuffle in personnel, this will allow the Group to strengthen its management team to meet the growing scale in its business operations based on its Five-Year Plan.

Proposed Acquisition of a Full Licensed UK Bank

In the press release dated 7 January 2022, iFAST announced that the Group has signed an agreement with its partner, Eagles Peak Holding Limited, to acquire BFC Bank Limited (“BFC Bank” or “UK bank”) from Bahrain-based BFC Group Holdings. Upon the agreement, the Group will have an 85% stake in the UK bank.

Commenting on this acquisition, Chairman and CEO of iFAST, Mr. Lim Chung Chun said, “A full licensed UK bank will fit these requirements very well, given London’s status as a top financial centre with strong connectivity to the world, and given the forward-looking regulatory frameworks. The proposed acquisition in the UK bank will allow the Group to acquire a banking licence in the UK, a reputable jurisdiction and a global financial centre.”

Lastly, iFAST sees this latest acquisition as an opportunity to add a digital bank to its Fintech Ecosystem. The Group also sees synergy in adding the UK bank’s capabilities into its existing digital wealth management platform, strengthening its vision to become a truly global wealth management business and opening up other opportunities in the future.

Technical Analysis for iFAST

Based on the weekly chart for iFAST, after experiencing a rally in its share price since March 2021, the sharp selldown in October 2021 seems to be a start of a downward trend. This can be seen from the high volume as well as its share price closing below the 20 Day Moving Average for the first time since March 2021.

Subsequently, its share price tried to close above the 20 Day Moving Average on a few occasions, but to no avail. Coupled with the low volume, this resulted in its share price dropping further in the following weeks.

At the start of 2022, the selling intensifies following the acquisition of a majority stake in BFC Bank. This can be seen from the increasing trading volume by the week, MACD Line below the zero line and the share price trading beyond the lower limit of the Bollinger Band.

Furthermore, its share price has declined below the recent private placement price of S$7.50, an important psychological price level for many investors. With the price trading beyond the lower limit of the Bollinger Band, some bargain hunting activities are occurring, and investors will have to take note if this momentum can last.

Conclusion & Management Outlook

To conclude, iFAST continued to produce a good set of financial results, with double digit growth in its topline and bottom line. Despite the strong set of performance, analysts have turned cautious on the prospects for the Group mainly due to the increasing competition within the industry. Investors should continue to keep a lookout for any significant developments for iFAST.

In terms of management outlook, iFAST mentioned that the Group will continue to work on various initiatives in all existing markets that the Group operates in to ensure that its medium to long term growth prospects remain strong. The Group is on track to see its business performance achieve healthy growth for the full year 2021 as compared to 2020.

This article was first publised on Investor-One on 7 February 2022 here.

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