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6 Things to Know About iFAST Corporation Ltd From Management

Last week, Jean Paul Wong, the corporate communications director of iFAST Corporation Ltd (SGX: AIY), gave a presentation on the company’s business and its future. Here are six things I learnt from the presentation (for the first three, head here).

iFAST’s milestones

Here’s a chart showing iFAST’s various milestones going back to 2000:

Source: iFAST Corporation Ltd’s Third Quarter Earnings Presentation

Some of the key highlights include the company’s maiden launch of Fundsupermart.com in Singapore 17 years ago. iFAST followed up with the launch of Fundsupermart.com in Hong Kong in 2007, and in Malaysia in 2008.

In 2014, the investment products platform provider incorporated its business in China, and got listed on the Singapore stock market. In the following year, iFAST received a license to distribute funds in China, and had a soft-launch of its China platform in 2016.

More recently, iFAST launched a local stockbroking service on FSMOne in Singapore.

Third-quarter financial results

For the third-quarter of 2017, iFAST’s net revenue surged 21.9% year-on-year to S$13.02 million. Net revenue represents sales earned by iFAST after accounting for commissions and fees that are paid or are payable to third-party financial advisers.

The company’s business model includes a stream of reliable recurring revenue that is based on its assets under administration (AUA). For the quarter, 81.6% of net revenue was derived from recurring net revenue, and the rest was from non-recurring net revenue.

The increase in recurring net revenue for the quarter was mainly due to an increase in average AUA for both the Business-to-Consumer (B2C) and Business-to-Business (B2B) divisions in iFAST. Positive market sentiment resulted in new inflows of investments from customers. For context, iFAST’s AUA grew 19.3% year-on-year to reach a new record of $7.16 billion, as of 30 September 2017. This marks the fifth consecutive quarter of record AUA levels for the company.

iFAST’s operations in China are still in the early stages, and it posted a loss of S$1.03 million for the latest quarter. Expenses in China increased 5.2% during the quarter as the business continues to ramp up its activities with additional headcount and a new office in Shanghai.

In all, iFAST’s net profit attributable to shareholders grew 21.5% year-on-year to S$2.32 million.

Below is a summary of the income statement from the latest quarter and the previous year’s third quarter:

Source: iFAST Corporation’s 2017 third quarter earnings presentation

The China operations

iFAST is investing in China because it believes that the country “will eventually become the largest wealth management market in Asia.” It is still early days for iFAST though, as seen from the losses of S$1.03 million incurred in China during 2017’s third quarter.

The company is only in the B2B space in China, as it deems the B2C space to be very competitive. iFAST’s China platform has signed up more than 20 B2B partners (including internet and financial services companies), which the company expects “could boost future AUA and sales numbers.”

As of 30 September 2017, the China platform has over 2,300 founds from over 65 fund houses.

iFAST also sees opportunity in the offshore segment in the China market as well, as more Chinese companies are looking to help their clients invest internationally.

During the third quarter of 2017, iFAST took a minority stake in Beijing Financial Alliance Technology Co Ltd, which can provide a network of financial advisors and financial advisory companies. This could help grow the company’s China operations.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of iFAST Corporation Ltd. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.