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UOB Kay Hian
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Asiamed getting HOT!
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tangsookiam1947
Master |
19-Oct-2024 10:02
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MAS tacks $375k fine on UOB Kay Hian | Singapore Business Review (sbr.com.sg)MAS tacks $375k fine on UOB Kay HianThe fine is for breaches in business conduct and anti-money laundering rules. The Monetary Authority of Singapore has fined UOB Kay Hian Private Limited $375k for its failure to comply with business conduct requirements under the Securities and Futures (Licensing and Conduct of Business) Regulations (SFR) and anti-money laundering and countering the financing of terrorism (AML/CFT) requirements under MAS Notice SFA04-N02. Between September 2012 and June 2018, MAS said UOBKH failed to implement adequate control over its corporate finance business and failed to ensure that its CF business was subject to internal audit. ALSO READ: MAS slaps former UOB Kay Hian rep with $100,000 civil fine over false trading Specifically, UOBKH&rsquo s internal policies failed to sufficiently involve its Compliance function in matters of compliance, thereby compromising its effectiveness. It also failed to meet the standards set out in the applicable Association of Banks in Singapore Listings Due Diligence Guidelines for internal policies and procedures on conducting due diligence for IPOs UOBKH also did not subject its CF activities to an adequate internal audit that is commensurate with the nature of its business. Specifically, since its inception in September 2012, no internal audits were carried out on the CF department.
Between December 2016 and August 2017, UOBKH also committed breaches of MAS&rsquo AML/CFT requirements, which were a result of material lapses in its control processes. MAS said that UOBKH failed to verify customers&rsquo source of wealth (SOW) during onboarding, even though they were determined by the firm to be of higher money laundering (ML) risk. UOBKH&rsquo s practice of verifying the SOW of such customers only upon specific trigger events did not comply with AML/CFT requirements for performing enhanced customer due diligence on customers who pose higher ML risk. UOBKH also accepted third-party receipts that represented a substantial amount of the value of an IPO without conducting adequate due diligence. As a result, UOBKH failed to detect and report suspicious transactions despite red flags of potential nominee arrangements, which may be abused to conceal beneficial ownership and facilitate market misconduct. &ldquo UOBKH&rsquo s breaches of AML/CFT requirements exposed it to the risk of being used as a conduit for financial crime. UOBKH has taken remedial measures to enhance its internal policies and controls. In addition, MAS has required UOBKH to appoint an independent external party to validate the implementation and effectiveness of its remediation measures and report the findings to MAS,&rdquo MAS said. UOBKH has already paid the fine in full.
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tangsookiam1947
Master |
19-Oct-2024 09:59
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Singapore Exchange Regulation (SGX RegCo) is lifting the moratorium against UOB Kay Hian with immediate effect, the regulator announced on Oct 17. SGX RegCo had imposed several requirements against the brokerage under Mainboard Rule 1405(1)(k) and Catalist Rule 305(1)(k) on Dec 27, 2022, after UOB Kay Hian was found to have failed to comply with business conduct requirements under the Securities and Futures (Licensing and Conduct of Business) Regulations. UOB Kay Hian also failed to comply with requirements for regulations pertaining to anti-money laundering and countering the financing of terrorism requirements under MAS Notice SFA04-N02. The requirements imposed by the SGX RegCo included prohibiting UOB Kay Hian from acting as an issue manager or as a full sponsor for initial public offerings (IPOs) on SGX&rsquo s Mainboard and Catalist board and reverse takeover (RTO) submissions. This excluded submissions where UOB Kay Hian agreed to act as an issue manager or full sponsor before Aug 31, 2022. The requirements came after the Monetary Authority of Singapore (MAS) announced, on Aug 31, 2022, that it imposed a $375,000 composition penalty on the brokerage for the same reasons. In its Oct 17, SGX RegCo said that the brokerage has taken &ldquo remedial action&rdquo to strengthen its policies and procedures for IPO and RTO transactions. This includes an &ldquo enhanced oversight&rdquo on the activities made by UOB Kay Hian&rsquo s corporate finance department. SGX RegCo lifts moratorium against UOB Kay Hian (theedgesingapore.com)
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alexvar
Senior |
14-Oct-2024 00:39
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iFast Corp update by Sakura research: Pulling a Fast One Questionable Accounting Practices, Misleading Investors, and Fraud. https://sakuraresearch.com/?p=195 It has been more than a month since Sakura Research released its report and accompanying accounting questions, but SGX-listed iFast Corp has decided to ignore them. This further convinces us that iFast has a number of skeletons hidden away, as it continues to mislead stakeholders and destroy shareholder value. iFast Corp operates a wealth management and brokerage platform, with the majority of its Assets Under Administration (AUA) coming from Singapore (more than 70% of all AUA). iFast Corp also provides IT services, such as those for the Hong Kong Mandatory Provident Fund Schemes Authority (MPFA eMPF / ePension project). After raising S$205 million since 2022 (S$105 million in equity issuance in January 2022 and S$100 million in bond issuance in June 2024), iFast completed the 100% acquisition of a loss-making UK bank (iFast Global Bank subsidiary) in September 2024. iFast operational and geographical complexity is rapidly increasing. iFast Corp founder, CEO, and Chairman is Lim Chung Chun, a Malaysian national. 1) IFAST core wealth management business is struggling, with its operating profitability per AUA dropping to record lows amid intense brokerage fees/commissions competition. Operating profit % margins per $ AUA have dropped from 0.181% in 2020 to 0.047% in 2023. Recently, IFAST Corp has started counting the UK Bank customer deposits towards its wealth management/brokerage AUA &ndash this seems highly irregular and possibly illegal. IFAST S$20B AUAs are based in Asia (> 70% from Singapore). AUAs include assets that IFAST manages or has discretion over, such as unit trusts, ETFs, stocks, and bonds. Customer deposits at the UK bank, while they can be invested in safe bonds and BoE instruments, should not be counted as AUA. It is essential that IFAST clearly discloses how it calculates the platform AUA. AUA measurement and reporting is a key audit matter (KAM) raised by IFAST auditors (KPMG), and, therefore, an area of fraud risk. Sources: IFAST Corp annual reports 2019, 2023. IFAST Corp 2Q2024 & 1H2024 Results Briefing on YouTube (12:19 / 1:00:24) 2) There is a temporary revenue bump from the Hong Kong ePension IT services project implementation (2023-2025), which we expect to drop off by approximately 80% in 2026 once the IT project enters the maintenance phase. Since 2021, IFAST has been providing and regularly updating its revenue and profit guidance for its Hong Kong business for 2023, 2024, and 2025. However, iFAST has refused to provide any guidance range for its revenues or profits of Hong Kong for 2026. The recognition of IT fintech service revenues is a key audit matter (KAM) raised by IFAST auditors (KPMG) and, therefore, poses a fraud risk. Sources: IFAST Corp annual report 2022, 2023. 3) IFAST Corp appears to have underreported its subsidiary UK bank losses by £ 9-10 million GBP for 2022 and 2023. IFAST Corp reported S$13.6 million SGD (approximately £ 8 million GBP) in losses for its UK banking operations on SGX, while its UK bank subsidiary reported losses of £ 17.57 million GBP for the 2-year period. Sources: IFAST Corp annual report 2023, UK IFAST Global Bank Limited annual report 2023 4) We estimate that IFAST Corp has a goodwill impairment of approximately £ 19 million GBP yet to be recognized from the expensive UK bank acquisition, which reported losses in 2022, 2023, and H1 2024. To acquire 100% of the loss-making bank, IFAST has so far injected £ 94 million (£ 84 million in equity and £ 10 million in loans) by 12 September 2024 into the Bank, with the Bank net tangible book value of just £ 13m prior to the acquisition. iFast seems to have injected further funds into its UK bank on 26 September 2024. Goodwill impairment is a key audit matter (KAM) raised by IFAST auditors and, therefore, poses a fraud risk. Sources: IFAST Corp annual report 2023, UK Companies House [ https://find-and-update.company-information.service.gov.uk/company/13045848/filing-history ] 5) In Singapore, IFAST Corp CEO says that IFAST aims for its subsidiary bank breakeven in Q4, 2024. Meanwhile, on its latest UK annual filings, the same Bank reports that it expects no profitability in the foreseeable future, and thus, it does not recognize any deferred tax assets. There is an intense competition for this tiny digital Bank in the UK, and thus, the Bank sees no foreseeable profitability. Furthermore, The UK bank subsidiary CEO, Mujahid Malik, holds positions in other 5 UK companies. Sources: UK IFAST Global Bank Limited annual report 2023 IFAST Corp 2Q2024 & 1H2024 Results Briefing on YouTube Companies House &ndash GOV.UK 6) Aggressive revenue recognition, suspect total receivables growth, and possibly understated credit impairment. IFAST Days Sales Outstanding (DSO) have increased to 275 days in 2023 compared to the 118 DSO days in 2021. However, the annual credit impairment is still at 0%, from 2020 to 2023. The negative DSO trend in quickly rising receivables has continued unabated in H1, 2024. Revenue recognition from both IT services and wealth management AUAs is a key audit matter (KAM) raised by IFAST auditors. Furthermore, IFAST demonstrates erratic year-to-year changes in its reported credit risk counterparty exposure. For ex, from 2021 to 2023, its exposure to Distributors increased from approximately $20 million to $120 million, 6X increase in just 2 years! Sources: IFAST Corp annual reports, 2020 to 2023. 7) Misleading operational cash flow reporting. Degrading adjusted operating cash flows (which actually turned negative in Q1 2024). IFAST Corp is using the UK Bank customer deposits to flatter the Operating cash flows. For example, IFAST 2023 operating cash flow of S$273m includes the customer deposits, but only S$16.7m without the UK Bank customer deposits. IFAST does not seem to generate enough operating cash flows to pay annual CapEx of ~S$20m and annual dividends of ~S$15m. Due to inability to generate free cash flows, iFast has had to raise S$205m (S$105 million in equity issuance in January 2022 and S$100 million in bond issuance in June 2024), to acquire the UK bank with just £ 13m GBP net tangible value prior to the acquisition. Based on its annual filings, the UK Bank is expected to keep making losses and necessitating further cash injections! Due to cash flow issues, IFAST seems to take longer to pay its suppliers. Days Payable Outstanding (DPO) increased from 134 days in 2021 to 254 days in 2023, almost doubling in just two years! Sources: IFAST Corp annual reports, 2021, 2022, 2023 Summary: All the above issues seem to show up on iFast increasing balance sheet stress. Since the end of 2021 to June-2024, a massive 955% growth in total liabilities, compared to an 124% increase in Equity. High Leverage ratio of 3.6 times as of June-2024. The above statements and questions regarding accounting practices at iFast Corp that necessitate urgent investigations by regulators (including SGX RegCo and MAS) and follow-up enforcement actions. So far we have received the following email reply from SGX RegCo Whistleblowing. Please be informed that we are looking into the matters raised by you, and we will respond to you as soon as possible. We also hope that IFAST Corp management and IFAST Auditors (KPMG) will agree to respond to our accounting questions soon. |
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wehuattogether88
Supreme |
24-Sep-2024 14:08
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UOB Kay Hian share price no matter how high it goes still cannot compare with iFast which is much much higher.
Unless UOB Kay Hian reach above S$5.00 |
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alexvar
Senior |
19-Sep-2024 13:34
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Woohoo. UOBKH keeps breaking new yearly share price highs. Let' s go! Dyodd |
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alexvar
Senior |
09-Sep-2024 13:05
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Has anyone watched iFast and UOB Kay Hian video by youtuber Master Leong? ML Reacts to iFAST Short Seller Report! https://www.youtube.com/watch?v=Zna_bqPTj1I Looks like Master Leong failed to see good cash balances, great operating cash flows, and Endowus-supported growth at UOB-Kay Hian brokerage. It could be taken over private by UOB bank parent. DYODD. |
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wehuattogether88
Supreme |
26-Aug-2024 16:01
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I agreed with u. Might see some actions from funds and BBS hopefully.
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alexvar
Senior |
26-Aug-2024 12:07
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Yes indeed. Similar to DBS Vickers of DBS and iOCBC securities of OCBC, UOB Bank should bring the UOB-Kay Hian in-house. P/B of ~0.6 for UOBKH, vs. 1.10 P/B ratio for UOB Bank. Bring UOBKH in-house, similar to Great Eastern takeover by OCBC. iFast is bound to come back to $1 per share. After iFast COVID19 surge, it is now under financial stress, total liabilities are growing massively since 2021, and iFast can' t even generate free cash flow to pay annual CAPEX + annual dividends. iFast would have to borrow more loans & bonds to burn more cash at its UK digital bank. |
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wehuattogether88
Supreme |
26-Aug-2024 10:13
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I think UOB Kay Hian will be prime target for privatization by UOB. It is making money and share price not going as high as IFast. Going private for UOB Kay Hian might happened sooner or later. Just take a seat and watch slowly. | ||
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bamboo300306
Veteran |
22-Aug-2024 22:37
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Businessman only offer when the earning is low to take advantage of low valuation not when the EPs is increasing . He has to fork put more money. Common sense .
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wehuattogether88
Supreme |
22-Aug-2024 14:10
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This report is good but it all depends on whether BBs want to push UOB Kay Hian higher. Or it remains at this level. | ||
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alexvar
Senior |
22-Aug-2024 12:37
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SAKURARESEARCH.COM OPINIONS ONLY. SAKURA RESEARCH is long UOB-Kay Hian (SGX:U10). Based on our in-house calculations, UOB-Kay Hian (UOBKH) trades at significantly lower valuations in every aspect (such as book value, operating cash flow multiple, P/S and P/E multiples, net income per worker, and dividend yield), suggesting to us more than 90% average downside iFast (iFast Corporation Ltd, or &ldquo IFCL&rdquo ) shares. We see an average valuation premium of about 12 times for the Group compared to UOBKH&rsquo s valuation. The Group&rsquo s valuation premium ranges from about 4 times to about 16 times compared to UOBKH&rsquo s valuation. In our humble opinion, UOBKH, which boasts a dividend yield-rich and cash flow-rich profile along with a cash-rich balance sheet, is grossly undervalued. Given the limited free float (approximately 25%) and the market valuation significantly below book value, we believe it is a prime candidate for a privatization/takeover deal by UOB (similar to the recent takeover of Great Eastern Holdings by OCBC). Recently, UOBKH has been increasing its stake in Bangkok-Listed UOB Kay Hian Securities (Thailand), which trades attractively at ~0.6 P/B only. Additionally, UOBKH provides custodial services to the fast-growing Endowus, allowing UOBKH to gain more customers through Endowus. For all these reasons, we think that UOBKH shares are massively undervalued and should be trading at more than S$3. |
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alexvar
Senior |
22-Aug-2024 12:19
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SAKURA RESEARCH. SakuraResearch.com TERMS APPLY. Questions for iFAST Management a) Digital banks have often been unprofitable, requiring frequent and substantial capital infusions even with world-class technology teams. For instance, Sea-owned MariBank experienced widened losses in 2023, while GXS Bank (founded in 2022 and backed by Singtel and Grab Holdings) aims for profitability by 2027. While the Group targets iGB to breakeven & have a profitable quarter in Q4 2024, how do you even plan to operate profitably in 2025, 2026 and after, with iGB not even extending traditional consumer and/or business loans? What is the current net interest margin (NIM) for iGB banking operations? When do you expect the bank return rate on invested capital to exceed your inaugural $100m bond rate of 4.3%? b) iGB bank end-2023 net assets (i.e. Equity) stood at 39.481 million GBP. In July 2024, the Group paid £ 14.99 million pounds cash to increase its effective equity stake by 1.78% (from 91.29% to 93.07%) in the iGB-holding company (Eagles Peak Holdings Ltd, Co # 13045848). On this investment, could you clarify the pre-money and post-money valuation of Eagles Peak Holdings Ltd? What are the current roles of minority shareholder (Mr. Mandeep Ahluwalia, Syndeo Capital Limited, Company # 09982425) at Eagles Peak Holdings Ltd? For future cash infusions to iGB bank, will the cash/funds come exclusively from the Group? c) The Group aims to grow its &ldquo AUA&rdquo to $100 billions &ldquo by 2028-2030&rdquo . When and why did the Management decide to present the UK Bank customer deposits under the Core wealth platform AUA figure? How will this affect the operating profitability % per AUA? Customer deposits, by nature, can be removed from the UK bank at a moments notice. What makes the Group think that the UK bank customer deposits should be treated as Assets Under Administration (AUA) to create recurring revenues? d) Since iFast founding, Singapore is and has been the largest country, accounting for approximately 70% of the Group AUA. Yet, Hong Kong, with approximately 12% of the Group AUA, overtook Singapore in earnings and revenue contribution to the Group for H1 2024. " The ePension division in Hong Kong will be an important growth driver for the Group for 2024 and 2025. The company also expects the UK Bank to become an important growth driver in 2025 and beyond." Hong Kong Profit Guidance, Profit Before Tax 2025 was HKD $500 million. Can the Group provide any estimate or range of Revenues and/or Profit-before-tax for Hong Kong market for 2026, vs. 2025? Has the Group signed any maintenance contract with ePension contractor, PCCW Limited, for after 2025? e) iFast auditors have previously flagged revenue recognition policies as Key Audit Matter (KAM), related to both the platform AUA accrued revenues and IT solution accrued revenues. Accordingly, the calculation of accrued revenues related to both IT solutions & in-house AUA report involves judgement and is an area of potential fraud risk. Revenues for any given year are inclusive of accrued revenue where services have been rendered but the customers have not been billed (invoiced). What is the dollar value of Unbilled Uncompleted Contract Receivables for 2023, Q1 2024, and Q2 2024? What is the dollar value of Unbilled Trade and other Receivables for 2023, Q1 2024, and Q2 2024? f) We note that as of 31 July 2024, " trade and other receivables" amounted to $201 million, a significant &asymp 48% increase from the earlier 6 months (31 Dec 2023), where the Group recorded " trade and other receivables" of $136 million. (1) Please provide a breakdown of these " trade and other receivables." (2) Please provide the aging schedule of these " trade and other receivables" totalling $201 million, broken down into bands of 3 months. (3) Elaborate on the credit terms and policies for these trade and other receivables, as well as any trends in credit impairment. g) Grand total receivables (including both Trade receivables & Uncompleted Contract Receivables) have grown to $194m on 31-Dec-2023, and just the Trade receivables only have grown to 201,695,000 in Q2, 2024 vs. $136m on on 31-Dec-2023. What are the distributions as per below counterparties for the Trade Receivables? Group Distributors: % Retail customers: % Amounts due from related parties & associate company: % Others: % Similarly, what are the % distributions as per counterparties for Uncompleted Contract Receivables? h) Equity-settled operating expenses (for both staff compensation and external advisor payments) have increased more than 8 times in 3 years, from $3.27m in 2020 to $12m in 2023. This certainly helps conserve cash and flatter iFast operating cash flows. Who and which company control these shares and equity options for iFast staff & external advisors during the vesting period? Is it Crouzet Limited or Caerulean Limited, both incorporated in the British Virgin Islands? What is the average vesting period and other key issuance policies? Who is auditing and controlling against misuse and misreporting of these shares? i) In our opinion, iFast cash flow issues seem evident in the rising trade payables. Our calculated Days Payable Outstanding (DPO) has been increasing steadily to record highs, nearly doubling from 2021 to 2023. If iFast financials are accurate, it now takes around 8 months on average to pay its suppliers. DPO days: 2023: 254 days, 2022: 208 days, 2021: 134 days Who are the top 10 suppliers of the Group? How are suppliers reacting to the delayed payment terms, and what impact is this having on supplier relationships, terms of trade, and iFast operating profitability? |
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alexvar
Senior |
22-Aug-2024 12:06
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Sakura Research has released its maiden report covering the following companies: iFAST Corporation Ltd (SGX: AIY) UOB-Kay Hian Holdings Limited (U10.SI) Subject to Terms, the report copy, the questions for Management and Analyst misconceptions can be viewed here: https://SakuraResearch.com/ https://medium.com/@SakuraResearch Hope the covered ompanies will comment to the opinions and queries raised in the report. Equity analysts, credit rating analysts and business correspondents/reporters need to consider the report and interact with it too. |
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alexvar
Senior |
20-Aug-2024 11:28
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New exclusive research report will be released here this week, covering UOB-Kay Hian Holdings Limited (U10) and iFast Corp (AIY). Stay Tuned. |
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