Investors have their pick of attractive growth stocks to help grow their investment portfolio over time.
One of these is iFAST Corporation (SGX: AIY).
The fintech has done well in the last five years, with its share price catapulting from just S$1 to S$7.84.
In the past month, iFAST’s share price came to life, jumping by 12% and is fast approaching its 52-week high of S$8.51.
What can investors expect from the company and can this momentum continue?
Strong earnings for 1H 2024
First off, let’s review the most recent financial result from iFAST.
Back in July, the fintech released its first half of 2024 (1H 2024) and second quarter (2Q 2024) financial results.
Net revenue surged by 90.2% year on year to S$119.5 million with contributions from its core wealth management business along with higher revenue recognition from its Hong Kong eMPF (Mandatory Provident Fund) contract.
Operating profit soared more than fourfold year on year to S$38.6 million while net profit leapt 365% year on year from S$6.6 million to S$30.5 million.
The group’s assets under administration (AUA) also hit a record high of S$22.37 billion in line with net inflows of S$790 million during the latest quarter.
In line with the strong results, iFAST upped its interim dividend by 36.4% year on year to S$0.015, bringing 1H 2024’s dividend to S$0.028, up 33% year on year.
Hong Kong going strong
For 1H 2024, iFAST saw its Hong Kong ePension division, represented by the large eMPF, contribute more significantly to its Hong Kong division net revenue and profits.
The Hong Kong division saw revenue leap more than four-fold year on year to S$56.2 million.
Net profit for the division shot up from S$4 million to S$26.6 million over the same period.
iFAST is in the process of onboarding more trustees onto the new eMPF platform and the group will continue to support the backend administration processing.
Management believes the eMPF project will be an important growth driver for the group in both 2024 and 2025.
Net revenue for Hong Kong is projected to exceed HK$650 million for 2024 with profit before tax surpassing HK$250 million.
Next year, iFAST expects the division to record revenue in excess of HK$1 billion while profit before tax should be higher than HK$500 million.
Can its digital bank breakeven?
Back in January 2022, iFAST forked out S$73 million to purchase a digital bank in the UK and subsequently renamed it “iFAST Global Bank” or iGB.
Fast forward to the present, and the bank saw its deposit base grow to S$646.6 million as of 30 June 2024, up an impressive 80.3% year on year.
The growth in deposits contributed to a more than tripling of the bank’s net interest income to S$1.85 million for 2Q 2024.
Despite this strong traction, the UK bank has still not broken even.
Net revenue climbed 53.1% year on year to S$8.8 million for 1H 2024 but the bank posted a net loss of S$3.8 million for the period.
However, management still targets for iGB to breakeven by the fourth quarter of this year and believes that the bank will constitute an important growth pillar for the group in 2025.
Coming soon: ORSO ePension contributions
Back in June 2023, iFAST announced that its Hong Kong division launched ORSO ePension services to serve Hong Kong’s Occupational Retirement Schemes Ordinance (ORSO) Pension Scheme.
Similar to the eMPF contract, iFAST will help to digitalise the platform to enable enrolment, termination, contribution, and withdrawal.
iFAST expects ORSO to start adding to its AUA by the first quarter of 2025 and to bring “material positive contribution” to the group’s revenue and profitability next year.
Although the fintech has not quantified the impact of this contract, it looks set to make a sizable contribution to overall group revenue and profits.
Get Smart: Dividends look set to rise
iFAST is on a roll as it successfully executes the ePension project in Hong Kong that is helping to boost its revenue and bottom line.
Management also has high hopes for iGB with a target for breakeven by the end of this year.
With iGB within its fold and with ORSO set to contribute to its AUA next year, the group is now one step close to realising its target of achieving S$100 billion in AUA by 2028 to 2030.
Investors can also look forward to higher dividends in the future as management has demonstrated its willingness to increase the dividend payout in line with the rise in profits.
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Disclosure: Royston Yang owns shares of iFAST Corporation Limited.
