This Fintech Company Could Turbocharge Your Portfolio
- Rupam Deb
- May 19, 2022
- 4 min read
DBS recently downgraded iFAST Corporation (SGX: AIY) to “‘hold” due to a lack of near-term catalysts, while Citi has a “sell” call on the company.
Even though iFAST’s business is seeing short-term headwinds mainly due to the general stock market weakness, the company has plenty of opportunities to grow in the decades ahead.
Here at MoneyWiseSmart, we did a deep dive into the Singapore-listed fintech platform, and this full comprehensive report is part of our Multibagger Research Series.
The research report spans numerous pages and includes the following topics and more:
Business Overview and Competitive Advantage
Financial Summary
Growth Prospects
Risks
Valuation
The full report is only available to our Multibagger Research Series subscribers, but we are releasing a free preview for everyone’s benefit as below. If you wish to subscribe to our Multibagger Research Series for the full report, do check out the details at the end of this blog post.
Part 1: Business Overview
Introduction
Singapore investors would easily identify with iFAST Corporation (SGX: AIY) as it was one of the country’s best-performing stocks, if not, the top-performing stock in the local market last year.
And over the past five years, iFAST’s share price has surged close to 500% (talk about multi-bagger returns!), before softening of late with the broader market weakness.
Non-Singapore investors should take note of this company too as iFAST is working on becoming a global leader.
In a nutshell, iFAST is a wealth management financial technology (fintech) platform headquartered in Singapore.
It provides a wide range of investment products and services to financial advisory companies, financial institutions, banks, internet companies, multinational companies, as well as retail and high net worth investors in Asia.
Currently, iFAST offers access to over 14,000 investment products including funds, bonds, stocks, exchange-traded funds (ETFs), insurance products, and services including online discretionary portfolio management services, research and investment seminars, fintech solutions, investment administration and transactions services.
Other than Singapore, the company also has a presence in Hong Kong, Malaysia, China and India.
Business Model
iFAST runs three main business divisions and they are:
the business-to-consumer (B2C) division,
the business-to-business (B2B) division, and
the emerging fintech solutions/business-to-business-to-consumer (B2B2C) division.
The B2C umbrella houses FSMOne (formerly known as Fundsupermart) in Singapore and the region.
FSMOne is a platform for self-directed investors to invest in a wide range of investment products and services, supported by a user-friendly website and mobile application, research content, and customer service support.
Meanwhile, the B2B division caters to financial advisory firms, financial institutions and banks, which in turn have over 11,000 wealth advisers in five markets.
Some of the brands under iFAST’s B2B division include iFAST Central, iFAST Global Markets, and the newest one being iFAST ePension.
Source: iFAST 2021 annual report
The following chart summarises iFAST’s fintech ecosystem, as of 31 December 2021:
Source: iFAST 2021 fourth-quarter results presentation
Next, let’s focus on iFAST’s revenue streams.
We will look at the company’s net revenue, which represents revenue earned by iFAST after commission and fees are paid to third-party financial advisers.
iFAST’s net revenue can be broken down into two parts: recurring net revenue and non-recurring net revenue.
The majority of iFAST’s net revenue is recurring in nature (around 70% in 2021) and this is an aspect we like about the company.
Unlike one-off sales, recurring income is predictable and stable, allowing the company to ultimately budget easily for future growth needs.
Recurring net revenue comes mainly through trailer fees, platform fees, and wrap fees. It is usually calculated based on a percentage of average assets under administration (AUA) of investment products distributed on iFAST’s platforms.
A large chunk of this revenue is from trailer fees, which are the fees that a fund house pays iFAST for carrying its funds on the platform. Fund houses typically have an agreement to share part of their funds’ annual management fee (AMF) with distributors, such as iFAST. The trailer fee sharing is a percentage of the AMF.
iFAST’s recurring net revenue is largely correlated to its AUA.
Therefore, iFAST’s AUA, which shows the total net value of investment products that are under the company’s custody, is a key figure for investors to track for the company.
In general, the higher the AUA, the higher iFAST’s net revenue will be.
As of 31 December 2021, the company had AUA of S$19.0 billion, which has constantly been hitting record highs. For 2021, AUA grew 31.5% year-on-year on the back of significant net inflows of client assets into the group’s platforms.
Most of iFAST’s AUA comes from the B2B division (69.1% in 2021), while the rest are from the B2C division (remaining 30.9%).
Source: iFAST 2021 annual report
iFAST’s non-recurring net revenue includes transaction fees paid by customers to invest in unit trusts, stocks, and ETFs, fintech solutions IT development fees, forex conversions, and insurance commissions.
Overall, iFAST’s net revenue has broadened since 2017.
For instance, it now collects fintech solutions IT fee for services it provides to its B2B clients who do not have the capabilities or do not wish to build in-house fintech platforms.
Also, with the provision of stockbroking services, iFAST receives net interest income based on the cash held in its clients’ accounts.
The charts below show iFAST’s net revenue breakdown by markets and nature of business:
Source: iFAST 2021 annual report
Competitive Advantage
Premium content that includes details of iFAST’s competitive advantage to fend off its competitors
Part 2: Financials
Premium content that analyses iFAST’s historical financial performance
Part 3: Management Team
Premium content that explores iFAST’s management team and its stock purchases and insider ownership
Part 4: Growth
Premium content that looks at iFAST’s growth prospects, including the business acceleration at its Hong Kong market and iFAST’s four-year plan
Part 5: Risks and Valuation
Premium content that explores how the Hong Kong business acceleration ties into the company’s overall valuation, among other things
Full content of the research is available to our Multibagger Research Series subscribers only. Find out more details about our course by clicking on the “I Want Access to Multibagger Research Series” button below.
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