The global market’s sell-off in the past few months has lowered iFAST’s 3Q15 earnings. Maintain NEUTRAL and a DCF-based SGD1.42 TP (from SGD1.49, 3% downside). Its NPAT declined 0.5% YoY to SGD2.9m and revenue decreased 6.9% YoY while AUA declined 5% to SGD5.42bn from Jun 15. Despite decreasing our FY15 NPAT estimates by 6% and valuations being on the high side, we believe there are potential catalysts ahead.
• Impacted by sell-off in global markets
With the sell-off in global markets in the past few months, iFast Corp's (iFast) assets under administration (AUA) were also not spared, declining 5% to SGD5.42bn as compared to Jun 15, despite a SGD46m in net sales in 3Q15. Its net profit after tax (NPAT) also declined 0.5% YoY to SGD2.9m, while its revenue decreased 6.9% YoY to SGD20.5m, below our estimates. Across the four countries it operates in, Hong Kong performed the worst, with 3Q15 NPAT dropping 58.8% to SGD0.31m due to the global sell-off in equity markets and the negative impact from the suspension of the Capital Investment Entrant Scheme. Singapore continued its strong and steady growth of 22.5% YoY while Malaysia saw a positive turnaround from loss-making previously.
• Awarded fund distributor qualification in China
iFast has been awarded a funds distributor qualification from the China Securities Regulatory Commission. The qualification allows iFast to run an investment funds platform in China which they target to officially launch in late 1Q16. They also intend to work with different industry players in China to build an investment funds platform that can meet the wealth management needs of Chinese investors, both onshore and offshore investment products.
• Maintain NEUTRAL, with a lower DCF-backed SGD1.42 TP
We lower our FY15 NPAT estimates by 6%, resulting in our DCF-based TP to drop to SGD1.42 (growth=2.5%, WACC=8.2%) from SGD1.49 previously. Despite valuations being on the high side, we maintain NEUTRAL due to several potential catalysts ahead, ie a potential upside surprise from the speed of the uptake of the bonds and ETFs segment as well as its growth in China. (Read Report)
Source : RHB Research