iFast Corporation Ltd’s Maiden Earnings Report: What Investors Should Know

iFast Corporation Ltd  (SGX: AIY) reported its fiscal fourth quarter earnings for the year ended 31 December 2014 yesterday. The reporting period was for 1 October 2014 to 31 December 2014.

iFast is an internet based investment product distribution platform which got listed only a couple of months ago.

Folks in Singapore may be familiar with the company’s consumer facing product: The business of iFast can be divided into two buckets: the B2C (business-to-consumer) division and the B2B (business-to-business) division.

You can learn more about the company’s business and IPO (initial public offering) in here.

Financial highlights

Here’s a rundown on the financial figures for iFast’s first ever earnings announcement as a listed company:

  1. For the fourth quarter, overall revenue for iFast was up 17.7% on a year-on-year comparison, coming in at $19.8 million. For the full financial year 2014, revenue came in at $78.4 million – up 12.8% compared to 2013.
  2. On a net revenue basis (revenue nett of commisions and fees), iFast reported $36.6 million for 2014, a 16.1% increase from 2013. Of this, $29.5 million is recurring in nature.
  3. Profit for the period was down 62.7% to $1.1 million. For 2014, profit came in at $8.7 million or up 10% compared to the full year profit in 2013. iFast’s bottom-line in the reporting quarter was impacted by a one-time charge of $1.9 million for IPO expenses.
  4. Earnings per share (EPS) was 0.43 cents in the fourth quarter. The company made 3.98 cents in EPS (fully diluted) for the full financial year 2014. Adjusted for the IPO expenses, and a one-off gain, iFast’s adjusted full year EPS was 5.06 cents.
  5. 2014’s cash-flow from operations was $10.2 million with capital expenditures clocking in at $1 million. The low capex gave iFast a positive free cash flow of $9.2 million for 2014, which is a nice increase from the free cash flow of $6.3 million seen in 2013.
  6. Assets under administration (AUA) grew 16% year-on-year to S$5.36 billion.
  7. As of 31 December 2014, the company had $35.4 million in cash and equivalents and no debt.

Overall, it looks like a good start for iFast in its life as a public company. For the quarter, management also proposed a final dividend of 0.68 cents per share.

Operational highlights

For the fourth quarter, the B2C business saw its AUA increase to S$1.35 billion as of 31 December 2014. Meanwhile, the B2B side ended 2014 with an AUA of S$4.01 billion. Both segments’ AUA were up about 16% year-on-year.

The change in AUA is an important metric to follow. As the company stated in its IPO prospectus, “the size of our AUA is a good indicator of our Group’s net revenue, which represents revenue earned by our Group after deducting commission and fee paid or payable to third party financial advisers.”

And speaking of net revenue, the B2C business ended the year with $11.1 million while the B2b business achieved $25.5 million. At the country level, Singapore’s net revenue grew by 6.7% year-on-year to $25.7 million. Main growth in net revenue came from Hong Kong, which achieved a 45.8% increase to $9.5 million for 2014. Malaysia made up the rest of iFast’s net revenue on a geographical basis, clocking in $1.5 million for the period.

Mr. Lim Chung Chun, Chairman and Chief Executive Officer of iFast, added a few words on the quarter and the company’s future outlook:

“The FY2014 financial results showed good growth momentum. It is important that we continually upgrade the range of products and services so that as an investment platform, we can remain an industry leader. For our B2B business, one of our key missions is to be able to empower each financial advisory firm to achieve the capabilities of a mini ‘private bank’, to seamlessly advise investors across a full range of investment asset classes.

In 2015, we want to introduce an Online Discretionary Portfolio Management Service (Online DPMS) and a ‘Bondsupermart’ portal. Subject to the necessary regulatory approval, an Online DPMS will allow us to cater to DIY investors who want additional help with asset allocation and automated rebalancing within their individual investment account, at competitive fee levels.

For the B2B channel, an Online DPMS will allow us to help financial advisers to improve their investment advisory service to their clients, and reduce administrative burden substantially.”

Foolish summary

At its closing price yesterday of $1.33, iFast traded at around 33 times its latest trailing earnings. At the adjusted EPS of 5.06 cents, iFast is trading at around 26 times its trailing earnings.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.