IFAST Corporation (IFAST SP) - Maybank Kim Eng 2017-11-01: NDR Takeaways

IFAST Corporation (IFAST SP) - Maybank Kim Eng 2017-11-01: NDR Takeaways IFAST CORPORATION LTD. AIY.SI

IFAST Corporation (IFAST SP) - NDR Takeaways

Growth strategies and challenges 

  • We hosted a post-3Q17 results NDR for iFAST in Singapore. Discussions centred on:
    1. rollout of products and increased competition in B2C business;
    2. regulation of trailer fee structure; and
    3. update on its China operations, which are expected to be loss-making in FY17E. 
  • iFAST remains optimistic revenues will improve due to favourable market conditions and growth in AUA. Link to non-rated note.

Positive on product rollout; increased competition 

  • iFAST is positive that expansion of its B2C product offerings can drive growth, such as online robo-advisory services and FSMOne platform. 
  • It acknowledged that competitors have responded by trying to match its fee charges for pre-funded accounts in Singapore. Its recent promotions, such as SGD10 flat rate for SGX stocks/ETFs trades have also attracted clients with large ticket sizes. While these may not improve margins, it is likely to drive revenue through volume growth instead.

Implications if trailer fee structure becomes regulated 

  • As more than 60% of recurring net revenue comes from trailer fees, net revenue will be affected significantly if trailer fee structure in the countries that iFAST has a presence in becomes regulated. If this happens, iFAST hopes that platform fees can sustain recurring net revenue, with platform fees currently at between 0.2%-0.4% of AUA per annum.

Update on China operations 

  • Losses from its China operations widened to SGD3.04m as at 9M17 (annualised basis: SGD4m). Given the potential growth in both onshore and offshore markets, iFAST believes that further ramp-up and investments into China is necessary to scale up its operations. 
  • In 3Q17, it acquired a minority stake (less than 20%) in Beijing Financial Alliance Technology (BFAT), which can help to bring in potential B2B partners and improve sales.

Target Price: N/A

Ng Li Hiang Maybank Kim Eng | http://www.maybank-ke.com.sg/ 2017-11-01
Maybank Kim Eng SGX Stock Analyst Report NOT RATED Maintain NOT RATED 99998.000 Same 99998.000