iFAST Corporation Ltd (SGX:AIY) is one of the cool companies in Singapore that shares webcasts and/or transcripts of their earnings presentations (the link for iFast is here). The common investor in Singapore may be familiar with iFast’s main consumer facing product platform, fundsupermart.com. iFast’s business, which can be simply described as the distribution of investment products (think funds and unit trusts), can be divided into two buckets: The B2C (business-to-consumer) division and the B2B (business-to-business) division. You can read more about the company in here. Below are 10 useful things I learned from listening to iFast’s latest second-quarter webcast: PBT (profit before tax)…
The common investor in Singapore may be familiar with iFast’s main consumer facing product platform, fundsupermart.com. iFast’s business, which can be simply described as the distribution of investment products (think funds and unit trusts), can be divided into two buckets: The B2C (business-to-consumer) division and the B2B (business-to-business) division.
You can read more about the company in here.
Below are 10 useful things I learned from listening to iFast’s latest second-quarter webcast:
- PBT (profit before tax) margin, which is based on net revenue, came in at 32.2% for the first-half of 2015. iFast’s Chief Financial Officer David Leung pointed out that the PBT margin has been growing for the four years prior to this year. For illustration purposes, iFast’s PBT margin in 2011 was just 9.4%.
- On the balance sheet front, cash and other investments grew to around $61 million in the reporting quarter, up from about $57 million recorded at the end of 2014. Other investments, in this case, grew from $22 million at 31 December 2014 to $37 million in the reporting quarter.
- As mentioned in my previous article covering iFast’s second-quarter earnings, the company had declared a dividend of 0.68 cents for the second-quarter of 2015. The company plans to pay quarterly dividends for 2015, with a dividend payout ratio based on 60% of the company’s net profit. Leung added that the first three quarters of 2015 will see a dividend payout ratio of less than 60%, but the full year payout will add up to be 60%. Is Leung suggesting that there will be a bigger dividend payout in the fourth-quarter of 2015? We’ll see.
- The majority of iFast’s assets under administration (AUA) still resides in Singapore and Hong Kong. The two geographies took up 73.2% and 22.6%, respectively, of the group’s S$5.71 billion in AUA (as of 30 June 2015). Malaysia accounted for the rest.
- At the B2B level, iFast’s recurring net revenue grew at about 26% year-on-year in the first half of 2015. In contrast, non-recurring net revenue for the B2B segment only grew at 5% year-on-year. The bifurcation in growth rates was similar at the B2C level where recurring and non-recurring net revenue grew by around 27% and 10% respectively. Overall, the faster growth in recurring net revenue is a positive sign for iFast as this provides support for dividends and financial resources for future growth.
- At the country level, iFast’s Malaysia operations managed to eek past the break-even point to register a small profit. Meanwhile, the firm’s China operations are still in the red with things in there still in the preparation phase.
- Chief Executive Officer Lim Chung Chun also spoke on future plans for iFast. The company’s main priority is growing its investment platform. Unit trusts remain as iFast’s core product, but the firm wants to broaden the range of its products to attract more customers and increase its AUA.
- Another key strategy was to grow the capabilities of the company to that of a “mini private bank” for financial advisers. In this case, iFast wants to be sure that its line-up of financial products is complete enough to be able to serve the diverse needs of its clients. The company’s recent HK$14.7 million acquisition of Winfield Securities Limited this June is one way the firm is looking to add stocks into its financial product portfolio.
- Speaking on “bondsupermart”, Lim sees an opportunity similar to that of fundsupermart.com which was formed 15 years ago. Bondsupermart has been launched for both B2B and B2C platforms and seeks to provide information, research, and transactional ability on bonds for customers. Elsewhere, exchange traded funds (ETF) are currently distributed on iFast’s B2B platform, and Lim is looking for the ETF B2C platform to be launched next year.
- Finally, Lim also shared that iFast has applied for a third-party fund distribution license in China. The application follows the management team’s discussion on whether its business model will need to be tweaked to cater for the needs of the China market.
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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.