iFAST’s Q32021 net profit up 23.4%, Group unveils 5 year plan

iFAST Corporation Limited (SGX: AIY) has just released its fiscal 2021 third quarter (3Q2021) earnings. 

The group’s asset under administration (AUA) grew once again to reach a record high of S$18.4 billion as at 30 September 2021, marking the 6^th consecutive quarter of record AUA.

It also unveiled more details of the eMPF contract and provided investors with insights into its medium-term prospects by setting out a 5-year plan.  

Here are 6 highlights that investors should know about iFast’s latest earnings.

1. Healthy financial growth 

The fintech company continued its streak of strong financial numbers.

For 3Q2021, iFAST’s net revenue grew 32.6% year-on-year (YoY) to S$30.3 million. 

Separately, operating profit increased 22.4% YoY to S$9.1 million; while net profit improved 23.4% YoY to S$7.6 million.

For the 9 months ended 30 September 2021 (9M2021), iFAST’s net revenue grew 38.1% YoY to S$85.0 million, while its net profit surged 63.6% YoY to S$23.4 million. 

Reflecting the positive operating leverage of the group’s business model, its profit before tax (PBT) margins increased to 32.7% for 9M2021, compared to 29.6% for 2020 as a whole. 

2. Singapore operations remains major contributor of group’s net revenue 

Breaking down by geographical segment, the Singapore operation is still the major contributor of the group’s net revenue, making up roughly 65%. 

The average AUA of Singapore operation grew 58.5% YoY to S$12.7 billion in 3Q2021 and 61.6% YoY to S$11.7 billion in 9M2021.

The net revenue in Singapore operations grew 21.2% YoY in 3Q2021 and 36.9% YoY in 9M2021. 

The above achievement is the result from the group’s continuous investment in building a strong integrated wealth management platform, the broadening range and depth of services provided, and also further diversification of revenue streams to increase business resilience. 

(Source: 3Q2021 financial results)

3. iFAST to substantially accelerate its overall Hong Kong business  

iFAST unveiled more details of the eMPF contract along with estimates for net revenue and PBT margins for its Hong Kong division.

The group expects to achieve gross revenue of > HKD1 billion and > HKD1.5 billion, while target net revenue will be HKD800 million and HKD1.2 billion for the years 2024 and 2025, respectively.

PBT margins for 2024 and 2025 are projected to be 15% and 33% respectively.

After applying the exchange and tax rates, net profit is estimated at S$17.4 million for 2024 and S$57.3 million for 2025. 

In contrast, annualised net profit for its Hong Kong division currently stands at just S$8.4 million. 

This means that Hong Kong could potentially contribute almost 7 times the net profit that it is generating now in 2025.

The eMPF contract is indeed a game-changer for iFAST and will significantly boost its recurring income. 

4. 5-year plan revealed 

iFAST also surprised the market by disclosing a comprehensive 5-year plan focusing on 4 key aspects namely to get bigger and better, to accelerate Hong Kong’s growth, to pursue more licenses, and to build a truly global business model.

Firstly, the group will continue to work on increasing the scale and quality of its fintech wealth management platform, while remaining committed to achieving its goal of S$100 billion in group AUA by 2028.

Secondly, the group expects to substantially accelerate its overall Hong Kong business in the next 5 years, particularly in 2024 and 2025, as it effectively executes the eMPF business and continues to improve on its existing platform capabilities.

Thirdly, to ensure that iFAST remains a progressive and competitive fintech player and to improve overall user stickiness, the group expects to be pursuing more financial license in different jurisdictions and make strategic investments in adjacent fintech capabilities.

Lastly, the group targets to make tangible progress towards its vision of being a top fintech wealth management player with a truly global business model focused on helping investors invest globally and profitably. In order to achieve this, the group needs to continuously work on expanding its global fintech ecosystem and improve on the overall global connectivity, while being fully compliant with regulations and compliance requirements of various jurisdictions. 

5. Positive operating and free cash flow

iFAST’s asset light business model remains highly cash generative. 

Cash flow from operations for 9M2021 remained healthy at S$30.9 million, while free cash flow was plentiful at S$27.3 million.

The group maintained a debt-free balance sheet with cash and investments of S$54.4 million as of 30 September 2021. 

6. Dividends continues to rise 

Income-seeking investors will be happy to know that iFAST has, once again, raised its quarterly dividend. 

The company declared a third interim dividend of S$0.013, up 62.5% YoY from the S$0.008 interim dividend for 3Q 2020 paid in the prior year. 

For 9M2021, the group declared a total interim dividend of S$0.0340, an increase of 47.8% YoY compared to the total interim dividend of S$0.0230 declared for 9M2020. 

In summary

iFAST continues to benefit from net inflows of client assets as more people choose to do their investments online. 

The group’s mission statement is, “to help investors around the world invest globally and profitably”.  

iFAST seems to be keeping to its mission and moving in the right direction. Investors should feel optimistic and stay tuned for more positive catalysts from the group. 

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