iFAST’s 2Q15 NPAT rose 24.6% YoY to SGD3.3m and revenue grew 26% YoY, in line with estimates. We revise our growth rate to 2.5% from 2% to include new growth initiatives from the distribution of bonds and ETFs – this lifts our DCF-based TP to SGD1.49 (0.7% upside). AUA gained 14.7% to SGD5.71bn despite the volatile market sentiment related to issues in China and Greece. Its Malaysia operation has also turned around in 2Q15, with SGD0.01m in NPAT for 1H15. NEUTRAL.
■ Malaysia unit turns profitable
iFAST’s 2Q15 NPAT rose 24.6% YoY to SGD3.3m while its topline grew 26% YoY, in line with estimates. In Singapore and Hong Kong, 2Q15 NPAT grew 21.1% and 10% YoY to SGD2.9m and SGD0.6m respectively. Its business in Malaysia turned around, delivering a profit of SGD0.03m in 2Q15 and SGD0.01m in 1H15 respectively. Management declared a DPS of SGD0.68 cents, which represents a 53.9% payout ratio for 2Q15.
■ China still in a preparation phase
iFAST has applied for the Third Party Funds Distribution license in China and is still awaiting approval from the relevant government agencies. However, it is already preparing to launch an investment platform while its IT system (and the eventual provision of platform services) which would service potential business-tobusiness (B2B) customers is close to being completed. We expect its China unit to start contributing to total topline by FY16.
■ Strong YoY AUA growth of 14.7%
Assets under administration (AUA) rose 14.7% YoY to SGD5.71bn as at 30 Jun, but declined when compared to the 31 Mar level of SGD5.75bn, due to volatile market sentiment over issues in China and Greece that negatively affected the value of the group’s investment products.
■ Maintain NEUTRAL, with a higher DCF-backed TP of SGD1.49
We revise our growth rate to 2.5% from 2% to include new growth initiatives from the distribution of bonds and ETFs. Thus, our DCF-backed TP rises to SGD1.49 (growth=2.5%, WACC=8.2%) from SGD1.38 previously. We believe that iFAST is currently trading at its fair value, with a potential upside surprise from the speed of the uptake of the bonds and ETFs segment. (Read Report)