iFAST Corporation Limited (SGX: AIY) is a financial technology company that operates a platform for the buying and selling of unit trusts, equities, and bonds.
The fintech company has a presence in Singapore, Malaysia, Hong Kong, China, and India.
The group has reported rapid growth as more people hop onto its platform to look for suitable investment products.
The below is our quick take on iFAST’s latest earnings.
What
For the first nine months of 2021 (9M2021), iFAST reported a stellar set of financial numbers.
Gross revenue rose by 38.1% year on year to S$161.7 million while operating profit surged by 59.2% year on year to S$27.8 million.
Assets under administration (AUA) grew by 46.1% year on year for the third quarter of 2021 (3Q2021) to hit S$18.38 billion.
Meanwhile, its wealth advisory arm, iFAST Global Markets, also recently reported that its AUA has crossed the S$1 billion milestones.
The group has been beefing up its capabilities over the last few years, including the launch of US and Hong Kong stockbroking services for its Malaysian arm in July.
So What
Higher profits have led to a higher dividend payout which should delight dividend investors.
Net profit soared by 63.6% year on year to S$23.4 million.
As a result, iFAST raised its quarterly dividend by 62.5% year on year to S$0.013 from S$0.008 in the prior year.
For context, the group has paid out S$0.034 for the first nine months of the year, exceeding the dividends paid out for the whole of FY2020.
Now What
Several catalysts could see the group’s business grow further.
iFAST has led a consortium to apply for a digital bank licence in Malaysia. If successful, iFAST will own 40% of the digital bank and it will help the group to capture more opportunities to expand its customer base.
Over in Hong Kong, the group has won the successful tender for the eMPF platform project along with partner PCCW Limited (SEHK: 0008).
This contract will add significantly to the group’s Hong Kong division revenue, with target net revenue of HKD 800 million and HKD 1.2 billion by 2024 and 2025, respectively.
iFAST has estimated its profit before tax margin for 2024 and 2025 to be 15% and 33%, respectively, translating to projected profit before tax of HK$120 million and HK$396 million for each year.
Applying the current exchange rate for SGD:HKD, iFAST is expected to earn S$20.8 million for 2024 and S$68.6 million in pre-tax profit.
Hong Kong’s corporate tax rate is currently 16.5%, which means the group could recognise net profit after tax of S$17.4 million and S$57.3 million for 2024 and 2025, respectively.
As a comparison, the net profit after tax for its Hong Kong division for 9M2021 was just S$6.3 million.
Needless to say, the eMPF project will add a significant chunk of recurring revenue and profit for the group, thus greatly increasing the chances of iFAST raising its dividends in future years.
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Disclaimer: Chin Hui Leong owns share of iFAST Corporation Limited.
