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iFAST Corporation - RHB Invest 2016-04-29: China Start-Up Costs Hurting Bottomline

iFAST Corporation - RHB Invest 2016-04-29: China Start-Up Costs Hurting Bottomline IFAST CORPORATION LTD. AIY.SI 

iFast Corporation - China Start-Up Costs Hurting Bottomline

  • A weaker-than-expected 1Q16 on overall market weakness and China start-up costs have dragged down iFast’s 1Q16 profits by 58.4% YoY. 
  • Going forward, we expect the improving market conditions, especially in April, to contribute positively to earnings. 
  • However, we do expect China costs to continue to be a drag on profitability. As a result, we reduce our FY16 NPAT estimates by 13% after adjusting for higher China start-up costs. This leads to a lower DCF-backed SGD1.17 TP (from SGD1.27, 3% downside)
  • Maintain NEUTRAL.


Facing higher costs, China likely to remain unprofitable. 

  • iFast Corp (iFast) soft-launched its China business in March. It has also signed an agreement with an online media company in the East Asian nation to launch funds transaction capabilities. 
  • However, its cost base is likely to continue to expand and ought to continue to be a drag on profitability.

Weaker-than-expected 1Q16. 

  • Despite expecting a weaker 1Q16 previously, due to the sharp decline in global equity markets in the Jan-Mar 2016 period, iFast’s 1Q profit fell by 58.4%. This was more than we expected. This was also partially due to the start-up costs for its China business.

Expanding its suites of products. 

  • iFast is to launch an integrated wealth management platform, which includes stock transactional capabilities, in mid- 2016 for the Hong Kong market. 
  • Subscriptions of bonds in Singapore have also increased by 15% QoQ.

Key risks. 

  • A market downturn and China execution risks.

Maintain NEUTRAL with a DCF-backed SGD1.17 TP (from SGD1.27). 

  • We lower our FY16 NPAT estimates by 13%, which leads to a lower DCF-backed SGD1.17 TP. This is implies 24.3x FY16F P/E. 
  • Maintain NEUTRAL while we wait to see how iFast’s new growth initiatives pan out in such challenging times.




Jarick Seet RHB Research | http://www.rhbinvest.com.sg/ 2016-04-29
RHB Research SGX Stock Analyst Report NEUTRAL Maintain NEUTRAL 1.17 Down 1.27


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