5 Highlights from iFAST Corporation’s Latest Earnings

2021-04-25     thesmartinvestor
5 Highlights from iFAST Corporation’s Latest Earnings

2020 was a watershed year for iFAST Corporation Limited (SGX: AIY).

The financial technology (fintech) company saw its revenue, net profit and assets under administration (AUA) surge as the pandemic pushed more people to open brokerage accounts and transact digitally.

Despite the group not managing to clinch a coveted Singapore digital banking licence, organic growth still propelled the group’s revenue and net profit to a record high.

On this note, iFAST had just released its fiscal 2021 first-quarter earnings (1Q2021).

It turned out to be yet another strong performance from the fintech group.

Here are five highlights from its latest set of earnings.

1. Strong financials and operating leverage

For the quarter, iFAST reported a 51.4% year on year jump in net revenue.

The increase was driven by higher net inflows of client assets as the group expanded the range and depth of products and services being offered.

Operating profit more than doubled from S$4.3 million in 1Q2020 to S$10.3 million in 1Q2021.

The significant jump in operating profit demonstrates iFAST’s strong operating leverage, where expenses rose at a slower pace as compared to revenue.

Consequently, net profit soared by 142.5% year on year to S$8.8 million.

Free cash flow for the quarter also improved from S$2.8 million a year ago to S$7.3 million.

2. Another record net inflow and AUA

Fund inflows continued its positive momentum in 1Q2021.

The group saw a record AUA inflow of S$1.28 billion for the quarter, more than double that of the S$590 million recorded in the prior period.

For context, for the whole of 2020, net inflows amounted to S$3.2 billion, implying that 1Q2021 has already achieved 40% of what the entire 2020 had chalked up.

Gross unit trust subscriptions also logged a record high of S$2.2 billion, up from S$1.3 billion a year ago.

As a result of these strong inflows, the group’s AUA hit another record high of S$16.11 billion, up around 69% year on year.

3. Growth in Singapore’s B2B business

In Singapore, the group’s business-to-business (B2B) division witnessed strong uptake for its platform from financial advisory companies and financial institutions.

Sales for this division jumped by 127% year on year.

In particular, the iFAST Global Markets segment (iGM) saw sales surge by 158% year on year.

iGM provides clients with an advisor-assisted financial plan to help them take charge of their finances while recommending suitable products.

iFAST believes that the B2B division should continue to see strong growth as it on-boards more institutional partners and increases its customer base further.

With more wealth advisors choosing to tap on iGM, iFAST’s in-house advisory team grew 20% quarter-on-quarter.

4. Expanding its Malaysian stockbroking service

iFAST’s Malaysia operation saw healthy growth, with net revenue there increasing 118% year on year to S$3.4 million during the quarter.

The AUA for the country also hit a record high of S$1.5 billion as of 31 March 2021.

A month ago, iFAST launched its stockbroking service on its FSMOne platform.

Strong account openings were recorded during the quarter as total new accounts opened more than doubled.

The division believes there is strong interest among its clients for trading in overseas exchanges other than Malaysia and is working to provide them with access to US and Hong Kong stock exchanges.

5. Interim dividend raised

In line with the strong results, iFAST has upped its interim dividend to S$0.01.

This is 33% higher than the S$0.0075 the group declared in the same period last year.

iFAST’s trailing 12-month dividend per share stands at S$0.035, and the group expects to increase the dividend per share in 2021 compared to 2020.

Get Smart: More pending business developments

Investors should look forward to more business developments in the months to come.

The group is still awaiting the finalisation of the details for the design, build and operation of Hong Kong’s eMPF platform as part of the country’s revamp of its Mandatory Provision Fund Scheme.

It was announced back in late January that iFAST will work alongside PCCW Limited (HKSE: 0008) as a prime subcontractor.

Malaysia’s digital bank licences are also up for grabs.

According to CEO Lim Chung Chun, iFAST will work with a local partner to submit a bid for a licence by June 2021.

The results for the tender should be announced early next year.

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Disclaimer: Royston Yang owns shares in iFAST Corporation Limited.

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