iFAST Corporation's 3Q21 Update - UOB Kay Hian 2021-10-26: 5-Year Plan Provides A Glimpse Of Upward Trajectory


iFAST Corporation's 3Q21 Update - 5-Year Plan Provides A Glimpse Of Upward Trajectory

  • Overall, iFAST’s AUA has continued to scale up at a faster-than-expected pace to S$18.38b (+46% y-o-y, +27% q-o-q), helping the fintech firm achieve greater operating scale. Net inflows of client assets remained healthy at S$0.87b in 3Q21, leading to net inflows of S$2.99b for 9M21.
  • iFAST remains committed to its previously-stated group AUA target of S$100b by 2028, implying a CAGR of 27% over the next seven years. Maintain BUY.

iFAST's AUA growth exceeds expectations; interim dividend raised.

  • Growth in assets under administration (AUA) for iFAST Corporation (SGX:AIY) has remained robust, reaching S$18.38b as at 30 Sep 21 (+46.1% y-o-y, +4.8% q-o-q). 3Q21 net revenue rose 32.6% y-o-y to S$30.3m, while EBIT and PATMI grew at a slower pace of 22.4% and 23.4% to S$9.1m and S$7.5m respectively, owing to lesser government grants and a net investment loss from debt instruments. Correspondingly, EBIT margin (based on net revenue) dipped to 30.0% (-2.5ppt y-o-y), while PATMI margin remained stable at 13.7%.
  • Third interim dividend was raised by 63% to S$0.013 (3Q20: S$0.008).

SG remains core market; net inflow of client assets indicates sustainability.

  • The Singapore market remains as the main AUA growth driver for iFAST, constituting S$13.0b in AUA (+53.5% y-o-y; +6.8% q-o-q). This is supported by the higher client base across both the business-to-business (B2B) and business-to-consumer (B2C) divisions, where the former saw:
    1. resilient business from wealth advisors and institutional partners throughout this pandemic, and
    2. new business partners added, while the latter’s FSMOne.com platform continued to attract more AUA with the launch of new products and low commission rates.
  • In terms of products, the AUA of unit trusts grew to a record S$13.46b (+39.5% y-o-y; +4.6% q-o-q), accounting for 73% of overall AUA.
  • Going forward, AUA growth is expected to remain stable, supported by the continued strength in net inflows of S$2.99b in 9M21 (2020: S$3.16b; 1H21: S$2.12b).

iFast has unveiled a 5-Year Plan, which provides growth trajectory ahead.

  • Get bigger and better. iFAST intends to continue with its management player with its truly global business model.

Positive momentum in AUA growth likely to remain.

  • iFAST has proven it is able to capture the growing pie China, as financial markets there continue to open and help spur growth in the Asian wealth management industry.
  • Several new growth avenues ahead. These include:
    • Malaysian stockbroking of > HK$800m and HK$1.2b respectively, vs 2020’s HK$107m and 2024 and 2025 PBT margin of > 15% and > 33% respectively, compared with 2020’s 30%. To recap, the project has a two-year implementation period to be completed by end-22, and a seven-year operation/maintenance period thereafter.

Potential catalyst in 1Q22, excluding strategic M&As.

  • Additionally, iFAST is Koperasi Angkatan Tentera Malaysia, THZ Alliance and Mr. Lee Thiam Wah, as well as international partner Yillion Fintech.

iFAST - Valuation & Recommendation

Clement Ho UOB Kay Hian Research | https://research.uobkayhian.com/ 2021-10-26
SGX Stock Analyst Report BUY MAINTAIN BUY 11.500 SAME 11.500