Investors&rsquo interest in iFast Corporation has declined over the last couple years, note UBS analysts Aakash Rawat and Benjamin Tan. 

 

Their gripes for most of 2022 include a significant deceleration in assets under administration (AUA) growth, from 30%-45% y-o-y growth in 2020/2021 to shrinking 8% in 2022 a surprise acquisition of a loss-making UK bank in early-2022 concerns over potential delays in the launch of the Hong Kong mandatory ePension platform project and a one-off impairment for the India business, which led to a net loss in 2QFY2022 ended June.

 

But are things finally turning for the better? Most of these concerns appear to be in the rear-view mirror with the outlook looking better from here, say the UBS analysts. 

 

Firstly, the decline in AUA has reversed with AUA growing 2%-4% q-o-q over the last few quarters. Net inflows have also recovered, which suggests a recovery in the underlying business momentum, they add.

 

Secondly, losses in the banking business have started to narrow with guidance for breakeven in 2H2024. The group also looks to be making good progress in line with their strategic plans with the launch of the corporate and consumer banking services this year, say Rawat and Tan.

 

Lastly, iFast reported an earlier and higher-than-expected contribution from the ePension division in 3Q2023, a quarter earlier than guided, which should help to ease concerns around eMPF launch delays, add the analysts. 

 

Hence, UBS has upgraded its target price by nearly 50% to $10 from $6.50 previously, while maintaining &ldquo buy&rdquo on iFast. 

 

In a Nov 27 note titled &ldquo Is it time to revisit iFast?&rdquo , Rawat and Tan think investors are likely to start pricing in the expected acceleration in earnings per share (EPS) growth, given the earlier-than-expected contribution from the ePension division in Hong Kong. 

 

&ldquo We believe this could continue to be a catalyst for the re-rating of the stock,&rdquo say the UBS analysts. &ldquo We expect upcoming positive catalyst at the 4QFY2023 results in February 2024, where management is expected to provide updated guidance to the Hong Kong business and we believe are likely to raise it.&rdquo

 

They also expect a stabilisation in interest rates to drive higher AUA growth for iFast. &ldquo Lower rates next year are likely to help with valuations re-rating. Over the medium term, we remain positive on the structural growth prospects and potential cross-divisional synergies between banking and the core wealth management business.&rdquo

 

For the core wealth management business, the UBS analysts forecast 11% y-o-y AUA growth in 2024 and stable net revenue/AUA margins of 65 basis points (bps). 

 

For iFast&rsquo s UK-based banking business, they forecast 20% y-o-y net revenue growth and a decline in cost-to-income ratio (CIR) to 65%, down from 107% in 2023, driving a narrowing of losses. 

 

For the ePension division, UBS forecast a $32.5 million profit before tax (PBT) contribution, &ldquo which is estimated based on the guidance shared for the Hong Kong business&rdquo . 

 

iFast shares started the year at $5.81, before news of its Hong Kong project delays weighed the stock to lows of around $4.16 in May. Since the release of iFast&rsquo s 3QFY2023 results, shares of the Mainboard-listed company have recovered beyond the 52-week highs seen in December 2022, but are still changing hands below the intra-day all-time high of $10.10 seen in September 2021.

 

iFAST Corporation AIY -0.13% has announced the launch of iFAST Global Hub.ai in Malaysia on Nov 21, an initiative part of the group' s three-year growth plan to become a prominent global player in digital banking, wealth management and pension administration solutions.

 

As part of its strategic expansion, iFAST Global Hub.ai is set to invest over RM150 million ($43.2 million) and will occupy more than 63,000 sqft of office space over the next five years. 

 

iFAST Global Hub.ai, formerly known as iFAST Service Centre, initially served as a regional service centre in Malaysia, offering call services, IT application development and operational support to the group. 

 

Following its transformation into a global digital hub for the entire iFAST Group, iFAST Global Hub.ai now plays a central role in most of the group&rsquo s business functions. It is set to significantly enhance operational efficiency and scalability and play a pivotal role in supporting the group&rsquo s improved effectiveness to deliver financial services to clients worldwide, says iFAST.

 

The new digital hub will focus on utilising advanced technology, particularly artificial intelligence (AI), to enhance the group&rsquo s fintech capabilities, bolster its operational efficiency, optimise workflows and promote scalability.

 

The establishment of iFAST Global Hub.ai will enable the group to effectively navigate an evolving business landscape, ensuring sustained growth and value creation for its stakeholders, says Lim Chung Chun, chairman and CEO of iFAST Corp. &ldquo With the integration of cutting-edge technologies, including AI, iFAST Global Hub.ai is set to revolutionise the way iFAST operate and serve our clients.&rdquo

 

iFAST Corp also announced its AI initiatives at its Nov 21 launch event in Malaysia, including plans to automate customer service with in-house AI solutions by end-2025, enabling the company to provide customer service support in over 50 languages, catering to clients worldwide around the clock.

 

&ldquo We recognise the potential of generative AI as we strive towards its integration into our products, and services, as well as our core operations. We believe this will not only elevate our service standards but also strengthen our position as a global fintech leader,&rdquo says Ma Qian Cheng, managing director of iFAST Global Hub.ai.

 

&ldquo Such initiatives are testaments to our commitment in delivering innovative, efficient, and globally accessible customer service solutions. Alongside automated customer service, the Group will also deploy AI in other key areas, including fraud detection, verification of identity documents, and search engine capabilities optimisation,&rdquo Ma adds.

 

FAST Global Hub.ai will also serve the key role of supporting the group' s ePension businesses, which offers a comprehensive range of pension administration services and digital solutions to its business partners.

 

iFAST Service Centre was recently awarded the Malaysia Digital (MD) status for its Digital Pension Solutions Services by the Malaysian Digital Economy Corporation (MDEC), the government agency leading the digital transformation of the Malaysian economy. 

 

MDEC CEO Mahadhir Aziz says: &ldquo We welcome iFAST&rsquo s expansion in Malaysia for its digital pension businesses. As a company that holds MD status, we believe iFAST will make an exceptional contribution and impact to Malaysia' s digital future.&rdquo

 

iFAST Global Hub.ai has also recognised the importance of synergy between academia and industry, forging strategic partnerships with several universities, including Multimedia University (MMU) in Selangor.

 

&ldquo Our active involvement in initiatives such as the iCadet Programme underscores our shared objective of nurturing graduates who benefit from early exposure to industry culture and environments, equipping them with the skills and insights needed to thrive in the workforce,&rdquo says Ma.

 

In line with the group' s growth plan, iFAST Global Hub.ai intends to recruit at least 400 digital talents to join the team over the next five years. &ldquo This strategic investment in human capital will further enhance the Group' s fintech ecosystem, bringing valuable expertise and opportunities to IT talents across the region,&rdquo says the group.