iFAST Corporation Ltd’s 2017 Annual Report: 3 Things I Learnt from the Chairman’s Message

Headquartered in Singapore, iFAST Corporation Ltd (SGX: AIY) is an Internet-based investment products distribution platform that provides a comprehensive range of investment products and services to both corporate clients and retail investors.

The company recently released its annual report for the financial year ended 31 December 2017. I learnt a few things as I was reading through the Chairman’s message in the report.

China is an integral part of iFAST’s growth

In 2017, net revenue improved by 21.5% year-on-year to S$49.4 million while profit attributable to shareholders jumped 65.9% to S$9 million. iFAST’s China operations posted a loss for the year, just like in previous years. However, the business in China is still in its infancy, and iFAST is currently planting the much-needed seeds to grow in the country.

Lim Chung Chun, the chairman and chief executive of the company, said in the annual report:

“Some shareholders have been concerned about the operating losses that we are currently incurring for China. The reality is that the nature of the investment platform business is such that losses are expected in the first few years of the set up before a critical mass is achieved. We see this initial phase as an important investment for the long run. China is expected to be the biggest wealth management market in Asia, and it is a market that we should not ignore.”

The company expects losses from China in 2018, and for the losses to be comparable to that in 2017. In the coming years, though, iFAST foresees China to be an important contributor to its overall business.

Opportunities in the financial technology (fintech) space

iFAST feels that the fintech space presents opportunities. It expects to see an increasing convergence of the different segments of the wealth management sector as consumers become more discerning to the fees they are being charged.

Lim went on to explain how his company is breaking down the fees-barrier:

“Companies that can properly harness the power of the Fintech will be able to potentially serve the consumers much better, and have far more competitive business models. For instance, by leveraging on our strengths in the unit trust industry (with good scale and strong base of recurring revenues), iFAST is able to offer the most competitive stockbroking dealing commission charges in Singapore.”

iFAST also sees opportunities in cross-border transactions. Every country has its own set of rules. However, with the proliferation of the internet, the world is becoming borderless, and regulators are keeping up with the times. Lim said:

“Increasingly, however, the power of the Internet is breaking down the geographical barriers. Regulators of various countries, recognising the potential of cross-border Fintech implications, have increasingly been introducing various regulatory changes and initiatives to ensure that Fintech in the respective countries can progress well.”

With a presence in five markets in Asia, iFAST added that it strives to be at the forefront of such cross-border opportunities.

Growth of the wealth management industry

Lim believes that the wealth management industry in the region has room to grow further and that iFAST can benefit from it. He said:

“The Group’s AUA [assets under administration] has been growing, increasing 24.3% YoY [year-on-year] to a record $7.58 billion at the end of 2017. We believe that in the medium to long term, the Group still has a lot of room for growth as the current AUA is still a small amount relative to the size of the wealth management industry in Singapore and Asia.”

In 2018, the company expects the businesses in its key markets of Singapore, Hong Kong, and Malaysia to show further improvements as compared to 2017. With that, its dividend per share is also expected to be higher in 2018 versus that of 2017.

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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. The Motley Fool Singapore contributor Sudhan P owns shares in iFAST Corporation Ltd.