IFAST CORPORATION LTD.
AIY.SI
iFAST Corporation - Global Rout Impacting Outlook
- A sharp decline in global equity markets over the past few months is likely to impact iFast negatively, especially in 1Q16.
- As such, we reduce our FY16 AUA growth and NPAT estimates, leading to a lower DCF-backed TP of SGD1.27 (vs SGD1.42, 1% downside).
- To drive growth in a challenging environment, iFast’s initiatives are to:
- expand into China,
- launch portfolio management service in Hong Kong and
- distribute bonds and ETFs in Singapore.
- Maintain NEUTRAL.
Weak quarter ahead.
- The recent sharp decline in global equity markets over the past few months is likely to impact iFast Corp (iFast) negatively, especially in 1Q16.
- With its assets under administration (AUA) – a key indicator of its performance – correlated with equity prices, we lower our 2016 AUA growth forecast to 3% (from 7%), leading us to cut 2016F NPAT by 11%.
Facing higher costs, China likely to remain unprofitable.
- iFast intends to have a soft launch of its China business in Mar 2016, together with its plan to partner with local Chinese entities that already have a well-established client base.
- However, in increasing its presence in China, its cost base is likely to continue to expand.
Singapore likely to remain the stronghold.
- We expect its Singapore business, which contributed 92% of 2015 NPAT, to continue to be iFast’s stronghold in the near future.
- In our view, its China expansion plans will likely bear profit only after two to three years.
Challenging 2016, maintain NEUTRAL.
- With a tough year ahead, we lower our 2016 NPAT estimate, which leads our DCF-backed TP lower to SGD1.27 (implying 25x FY16F P/E).
- We maintain NEUTRAL while waiting to see how its new growth initiatives pan out in such challenging times.
- The key risks to our forecasts would be a global economic crisis, as well as execution risks in China.
Jarick Seet
RHB Research
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http://www.rhbinvest.com.sg/
2016-02-23
RHB Research
SGX Stock
Analyst Report
1.27
Down
1.42
