iFAST: 3Q 2024 Exceeded Expectation

It’s another record quarter for iFAST Corporation Limited (SGX: AIY).

Strong contribution from HK ePension division contributed to the increase 3Q 2024 revenue by almost 50% year-on-year (YOY) to S$99.1 mil. Combined with double-digit growth in Singapore and Malaysia market, net profit surged by 97% YOY to S$16.7 mil.

I won’t delve into specifics, as their presentation provides detailed information. However, I’d like to highlight a few key points that caught my attention.

Exceeding their guidance

I often feel a sense of satisfaction when I see that the company’s guidance is met or exceeded. This reminds me that it’s important to pay attention to the company’s own information, rather than relying on secondary sources.

I am not discrediting others’ viewpoints, as they may offer valuable insights that even the management didn’t consider. However, when there are conflicting views, I should generally trust the company’s guidance.

The two major drivers for these few years’ growth are HK ePension project and iFast Global Bank (iBG). As illustrated by the above charts, iFAST will easily exceed its target for Hong Kong this year.

Additionally, iFAST is well-positioned to meet its target of reaching profitability for iBG in only two years. This is particularly impressive, given the struggles of other digital banks in the market, including Singapore’s GXS and MariBank.

One key factor that distinguishes iBG is its targetted customers – global clients who want to open accounts outside their home countries. In just over a year after it launched iGB, it has signed up clients from 70 over countries, with UK residents accounting for about 30% of the deposits.

If the company can sustain its current trajectory of adding S$500 million in customer deposits annually, its future potential is immense. This growth, coupled with the introduction of new products and cross-selling, could significantly boost its overall performance.

Growth is slowing but still high

4Q 2024 growth is likely to moderate due to a higher base. However, I remain optimistic that net profit for the upcoming quarter can still grow around 30% YOY.

This will translate to an estimated earnings per share (EPS) of S$0.21 for FY 2024. The current share price of S$7.75 implies a price-to-earnings (PE) ratio of 37x, which is in line with pre-COVID levels.

Looking further ahead, if iFAST continues to execute well, its FY 2025 EPS is likely to exceed S$0.30, thus it is only trading at a forward PE ratio of 26x.

While iFAST’s growth trajectory is encouraging, it’s essential to acknowledge potential economic headwinds. As it’s already a significant holding in my portfolio, I’ll continue to monitor its progress without making additional purchases at this time.

On a side note, to gain a more nuanced understanding of iGB’s potential, you can refer to AquaZenInvestor’s insightful article, “Breaking Even and Breaking Ground: How iFast Global Bank is Changing the Game,” published on InvestingNote.

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