WEALTH management platform iFast Corporation : AIY +1.84% is looking at its Hong Kong e-pension business segment to boost its revenue and profitability for the next three years, chief executive Lim Chung Chun said.

 

In a call on Wednesday (Feb 15) to discuss the company&rsquo s latest financial results, Lim said he is expecting the group&rsquo s e-pension business in Hong Kong to begin contributing to its financials in &ldquo a significant way&rdquo in the later part of this year. In 2024, iFast will book a full-year contribution from this business, Lim said. 

 

&ldquo We are looking at the (Hong Kong) e-pension division to be an important driver of growth in the next three years,&rdquo he added. But the growth of this division will taper off after 2025. 

 

iFast&rsquo s other business segments &ndash such as stocks, bonds, unit trusts and portfolio management services &ndash are pegged to short-term market conditions. 

 

But the e-pension division will not be subject to market volatility because it is a &ldquo service fee&rdquo , Lim said. The group therefore has a &ldquo comfortable knowledge&rdquo of the revenue this segment will bring this year. 

 

iFast is maintaining its guidance for the Hong Kong business that was issued in April last year. The group is aiming to hit gross revenue of more than HK$400 million (S$67.9 million) in 2023 and profit before tax of more than HK$100 million. 

 

In 2025, gross revenue is expected to exceed HK$1.6 billion and profit before tax is expected to surpass HK$500 million. 

 

On Tuesday, iFast posted an 82 per cent fall in net profit to S$1.3 million for its fourth fiscal quarter ended December. Revenue for the quarter was down just 13 per cent to S$47.4 million. 

 

In 2022, iFast faced a situation where revenue stagnated at some point in the year and costs increased, which impacted profitability, said Lim.

 

Key factors that dragged the group&rsquo s earnings included an estimated impairment allowance of S$5.2 million on the back of business restructuring in iFast India, preparations for its e-pension division in Hong Kong, as well as other &ldquo important strategic investments&rdquo the group had made over the year that clashed with tough global financial market conditions.

 

Although net profit fell substantially this financial year compared to last year, the group&rsquo s proposed final dividend payout was kept at a S$0.014 per share. 

 

Although profitability will improve this year, Lim said iFast will not &ldquo rush to raise (its) dividends&rdquo , and the bulk of the year&rsquo s dividend payouts will be &ldquo similar to last year&rdquo . 

 

However, shareholders can expect &ldquo further growth&rdquo in dividends from 2024, he said.  

 

In particular, iFast is expecting the China market to &ldquo continue to remain tough&rdquo in the short term, but Lim said the group will try to &ldquo contain&rdquo its losses by managing costs. 

 

Despite the stumble in the company&rsquo s Q4 results, Lim said iFast is looking to adopt a &ldquo global business model&rdquo . The acquisition of an 85 per cent stake in UK-based iFast Global Bank (formerly known as BFC Bank) back in January last year is one move that will help the company reach this goal, Lim said. 

 

In the near or medium term, iFast will look to secure customers in various countries without having to set up physical offices in each country, Lim said.

 

Over the past year, shares of iFast have fallen about 15 per cent, which Lim said &ldquo reflects the fact that business profitability has been reduced&rdquo .

 

But the company&rsquo s shares have steadily been over the S$5 mark despite a recent downgrade in January from DBS to &ldquo fully valued&rdquo on the back of reduced earnings estimates. The bank had also cut the company&rsquo s target price to S$3.98 from S$4. 

 

Lim said there could be some understanding from investors on the potential of the e-pension business. Long-term investors will always look at the potential of the business despite any short-term pull back or disruption, he said. 

FINTECH platform iFast Corporation : AIY +0.56% posted an 82 per cent drop in net profit to S$1.3 million for its fourth quarter (Q4) ended Dec 31, 2022, from S$7.2 million a year earlier.

 

In a bourse filing on Tuesday (Feb 14), the group said that its profitability declined substantially in 2022 due to several factors, namely strategic investments it had made throughout the year, preparations for its Hong Kong ePension division, and impairment losses related to the exit from its onshore Indian platform business.

 

Earnings per share stood at 0.44 Singapore cent for the fourth quarter, down from 2.6 cents a year earlier.

 

Revenue for Q4 2022 fell 13 per cent to S$47.4 million, from S$54.6 million previously. iFast said that it faced &ldquo very tough financial market conditions globally&rdquo during the year.

 

As at Dec 31, the company&rsquo s assets under administration declined 8.3 per cent year on year to S$17.42 billion. iFast noted, however, that its net inflows of client assets &ndash which it said was the most important indicator of its long-term growth potential &ndash remained healthy at S$263 million in Q4, and S$2.1 billion in FY2022 overall.

 

A final dividend of 1.4 Singapore cents per share was proposed for FY2022, unchanged from the year before. The dividend will be paid on May 19, 2023, once it is approved by shareholders at the group&rsquo s annual general meeting on Apr 26.

 

For the full year ended Dec 31, 2022, net profit was down 79 per cent year on year to S$6.4 million revenue was down 5 per cent to S$205.3 million.

 

Full-year net revenue, which is revenue earned by the group after deducting commission and fee expenses as well as interest expenses, rose 3.8 per cent year on year to S$118.2 million.

 

Meanwhile, iFast&rsquo s net revenue excluding its banking operations declined 3.4 per cent year on year to S$110.1 million, as a result of turbulent financial market conditions during the year.

 

The company expects to enter a period of high growth in terms of revenue and profitability between 2023 and 2025, due to substantial contributions to come from its ePension division in Hong Kong as well as some initial tangible progress in its digital banking business.