- A 1,170% stock price increase is impressive but the rally puts iFAST’s valuation at an all-time high.
- iFAST was unable to secure a digital license in Singapore but licenses elsewhere are still on the cards.
- CEO Chung Chun Lim has his sights on China and has a rather ambitious goal for 2028.
Who said Singapore’s stock market is boring? One Singaporean fintech company is proving quite the opposite. Since March 2020, iFAST’s stock price has increased over 1,170%, even outperforming headline dominator Sea Ltd.
iFAST isn’t a penny stock either. Far from it, the company is revolutionising the investment field, utilising digital technology to facilitate wealth management, and it’s doing so with unrivalled success.
As iFast’s stock price flirts with the SGD 10 mark, investors are questioning whether the fast-paced stock has peaked.
In fact, iFast still has potential to grow.
What even is iFAST?
iFAST provides investment solutions to financial advisers, financial institutions, insurance companies, pension fund managers, retail and accredited investors, and multinational companies, allowing them to manage their investments efficiently, easily and digitally.
The company isn’t a start-up either. iFAST actually dates back to 2000 and has since secured its footing as a renowned financial technology platform in Asia.
iFAST’s main focus is on B2B, with 68.3% of its assets under administration (AUA) focused on the segment, compared to 31.7% for B2C clients. Under its umbrella, iFAST has four B2B products: iFAST Central, iFAST Global Prestiges, iFAST Pensions and iFAST Global Markets. Unit Trusts account for 75.4% of these products and Singapore remains its biggest market focus, at 69.2%.
As of June 2021, the group’s AUA reached a record SGD 17.54 billion.
How does iFAST keep its fuel tank full?
The largest share of iFast’s revenues comes from trailer fees, accounting for 42.3%. Platform fees are the next biggest segment, making up 15.8% with transaction fees amounting to 12.8% of revenue.
The business model has proven successful for the company, and more importantly, is sustainable. 2Q2021 saw net profit grow 55% YoY to SGD 7.02 million. The 1Q2021 quarter was even more impressive, with a whopping increase in net profit of 142.5% to SGD 8.82 million. In total, 1H2021 net profit surged 94% to SGD 15.84 million.
iFAST’s valuation is iSPEEDING over the limit
Because of its stock price’s insane growth over the last year, iFAST is now valued at an all-time high. This isn’t good for old-school investors who are searching for undervalued gems. At its current stock price of SGD 9.78, iFAST has a market cap of SGD 2.71 billion with a P/E ratio of 97.06.
As it edges closer to SGD 10, investors who are jumping aboard now are paying a painfully high premium.
However, iFAST is still cheaper than competitor UP Fintech Holding, which owns Tiger Brokers and has a P/E ratio of 167.97. Futu Holdings, which owns trading platform Moomoo has a P/E ratio of 40.52. Positioned between the two competitors, the Singaporean broker’s valuation thus feels slightly less intimidating.
iFAST and its high-speed chase for digital licenses
Throughout 2020, iFAST and its shareholders suffered intense anxiety as to whether the Singaporean broker would be granted a digital banking licence by the Monetary Authority of Singapore.
Announced in 2019, the initiative was to promote a framework that would permit non-bank players to offer digital banking services. Those awarded with the license would be recognised as official, state approved banking alternatives and part of an integrated fintech ecosystem.
Such recognition is important as companies with the license can operate directly in competition with traditional banks such as DBS. However, there was one caveat: MAS would only issue up to five licenses by the end of 2020.
With tough competition from the likes of Singapore telecom titan Singtel (which was strengthened by forming a consortium with Grab), Razer, Ant Financial, Shengsiong, Yillion, FWD and more, iFAST certainly had its work cut out.
Sadly, iFAST was not among the license recipients, announced December 2020.
iFAST shareholders were frustrated, disappointed but optimistic. The more astute of you will notice that there were only four approved licenses listed above. This means MAS has one license left to fill. iFAST shareholders are hoping that iFAST will eventually secure the final license.
What’s more, iFast is applying to secure a digital bank licence in Malaysia, which will be issued by the first quarter of 2022. In a July 2021 report, Bank Negara Malaysia announced it received 29 applications, including one by iFAST. If successful, iFAST will own a 40% stake in the digital bank.
However, competition is fierce. Other digital license applicants such as Grab and Singtel’s consortium (again), Genting and AirAsia have established closer relationships with the Malaysian government.
Such wilful hoping is not without merit either. iFAST has a history of successfully acquiring licenses in Malaysia. In 2020, it acquired a Participating Organization license from Bursa Malaysia, which allowed it to add stocks and ETFs as a trading feature to its FSMOne website.
iFAST Capital then became Malaysia’s first ever multi-asset digital investment platform in April 2021. Although Singapore doesn’t regularly look to its neighbour for inspiration, MAS should at least recognise this achievement in its consideration of granting iFAST a Singapore license.
Additionally, in January 2021, the Mandatory Provident Fund Schemes Authority (MPFA) of Hong Kong awarded PCCW with a contract to build an eMPF Platform. iFAST participated in the tender for the eMPF Platform project with PCCW as its prime subcontractor.
“Through the adoption of new technologies and future-proof innovative solutions, the Platform will provide comprehensive MPF scheme administration services to over four million MPF scheme members and 300,000 employers, bringing about revolutionary changes to the MPF ecosystem”, MPFA said.
On 15 September 2021, iFast stated that it aims to provide guidance for the growth of its Hong Kong business for 2023/2024 by the end of this year too.
Again, whilst Singapore and Malaysia won’t follow Hong Kong exactly, it should surely regard iFAST as highly as its neighbours and rivals do.
iFAST’s CEO is flooring the pedal
iFAST CEO Chung Chun Lim is an incredibly ambitious leader. Although iFAST has its immediate sights set on Malaysia and Singapore, Lim is looking further beyond the horizon towards China. At the moment, iFAST’s Chinese operations are loss-making but Lim has stated that the country will be iFAST’s fastest growing market.
Lim currently has a goal of reaching SGD 100 billion AUA by 2028 and he envisages China playing an integral role in achieving this.
“The potential of the China market is immense, and the kind of losses we are generating today are a very manageable amount considering the size of the market”, Lim said.
To achieve the SGD 100 billion goal, which was first announced in 2018, Lim said iFAST’s AUA would need to increase at a compounded annual rate of 27% until 2028. Over the past two years, the platform’s AUA has already out-performed this target, growing at a rate of 34%.
Lim is ambitious and driven. Shareholders should sleep soundly knowing that Lim is behind the wheel.
Don’t be too iSLOW on iFAST
At almost SGD 10, iFAST’s stock price has rallied beyond belief over the last year, making the company the most expensive it has ever been. However, it’s not necessarily too late to jump aboard the iFAST train.
With a Singapore digital license still on the cards and ambitious but realistic growth targets set in play, iFAST has endless potential ahead of it. Whether its stock price will continue to rise at the speed it has is debatable, but Lim will nonetheless ensure iFAST is first past the finish line.