- iFAST’s Hong Kong ePension contributions are progressing well, with the new occupational retirement schemes platform project set to commence in 1Q 2025.
- Company’s 3Q 2024 earnings reported above Bloomberg consensus’ estimates, with notable improvements in UK banking losses.
- Benefiting from better investment sentiment, iFAST saw growth in Assets Under Administration and platform volumes.
iFAST Corporation Ltd (SGX:AIY) (iFAS.SI) is showing promising progress, particularly in its Hong Kong (HK) ePension contributions and upcoming occupational retirement schemes (ORSO) platform project.
The company recently announced its third quarter for the financial year 2024 (3Q 2024) results, which came in 7% above Bloomberg consensus’ estimates, with steady trading volumes and narrowing losses in its United Kingdom (UK) banking operations.
iFAST is a global digital banking and wealth management platform, providing a comprehensive range of investment products and services to financial advisory firms, financial institutions, and retail investors. The company operates in several countries, including Singapore, HK, Malaysia, China, and the UK.
Earnings Performance Highlights
- Strong Earnings Growth: iFAST reported a 3Q 2024 profit after tax and minority interests (PATMI) of S$16.8 million, marking a 5% quarter-on-quarter (QoQ) and 97% year-on-year (YoY) increase. The company’s net revenue rose by 4% QoQ and 53% YoY, driven by a 24% YoY growth in Assets Under Administration (AUA) and stable HK ePension contributions.
- Narrowing Losses in Key Markets: Notably, losses from iFAST Global Bank (iGB) in the UK halved to S$0.8 million, indicating progress towards breakeven in 4Q 2024. iGB deposits rose 25% QoQ to S$806 million in 3Q 2024, up from S$359 million in 4Q 2023. Management expects a positive profit trend going forward in FY2025. Additionally, operational losses in China narrowed slightly to S$1.4 million, improved from S$1.7 million in the previous quarter.
Future Prospects
- Launch of ORSO Platform: Looking ahead, iFAST plans to launch its ORSO platform project in 1Q 2025, which is expected to contribute to its AUA in Hong Kong.
- ePension Project Progress: The onboarding phase of the ePension project is progressing as planned, with stable quarterly contributions expected until a substantial pick-up in 2H 2025.
iFAST has reiterated its FY2025 targets for its HK business, including a profit before tax target of over HK$500 million, implying that ORSO contributions are already factored into these targets.
Key Risks to Monitor
- Implementation Delays: Potential delays in the implementation of the ORSO project could impact expected contributions and overall growth.
- Uncertainty in Fee Structures: There is limited information on the fees iFAST will earn from the ORSO project, which makes it hard to predict how profitable it will be. The total market for ORSO in Hong Kong is large, estimated at HK$294 billion as of September 2024. However, growing this new business might take time since it is not driven by the government.
- Conservative Banking Strategy: While iGB is approaching breakeven, its conservative balance sheet strategy, largely deploying deposits with the Bank of England and investment-grade bonds, may limit future profitability.
In summary, retail investors should keep an eye on the progress of the ORSO project and the continued performance of the HK ePension contributions. The company’s ability to swiftly onboard new clients across its platform will be crucial for sustained growth. Additionally, meeting its breakeven targets for iFAST Global Bank will be a key milestone.
Disclaimer: ProsperUs Manager of Content Hailey Chung doesn’t own shares of any mentioned companies.
Reference
CGSI Note | iFAST Corporation | Oct 29, 2024
