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How Does iFAST Corporation Ltd Make Its Money?

iFAST Corporation Ltd (SGX: AIY) is an Internet-based investment products distribution platform provider. Over the past month, iFAST’s stock has gained an impressive 22.0%, significantly outperforming the Straits Times Index’s (SGX: ^STI) 1.7% decline. Investors may thus be interested to learn more about iFAST.

It is important that we understand any company before investing in it. As the legendary investor Warren Buffett once wrote, ”We look for companies that have a) a business we understand; b) favourable long-term economics; c) able and trustworthy management; and d) a sensible price tag.”

Buffett’s quote underscores the importance of understanding the business that a company is in. For any investor who is interested in iFAST, here’s an overview of how the company makes its money.

Recurring and non-recurring

iFAST has two main net revenue segments: recurring, and non-recurring. Here’s a breakdown of the company’s net revenue by segment for 2017 and 2016:

Source: iFAST2017 annual report

iFAST’s recurring net revenue is mostly calculated based on a percentage of the average assets under administration (AUA) that are on its platforms. The recurring net revenue can be further broken down into three categories: Trailer fees; platform fees; and wrap fees. In 2017, they accounted for 62.9%, 27.2%, and 7.3% of iFAST’s recurring net revenue, respectively.

Meanwhile, non-recurring net revenue is derived from commissions, service fees, advertising fees, and IT solution fees.

As the table above shows, 82.8% of iFAST’s total net revenue came from recurring sources in 2017.

Geographical spread

The table below shows the geographical sources of iFAST’s net revenue in 2017:

Source: iFAST 2017annual report

We can see that iFAST derives its net revenue mainly from three countries. Singapore is by far the biggest contributor to the company’s net revenue – it had a share of 70.3% in 2017. Hong Kong and Malaysia came in with contributions of 21.8% and 7.0%, respectively.

iFAST’s China business is still in its infancy, and so it would likely take a number of years before it can contribute meaningfully to the company’s performance.

A conclusion

There are quite a few moving pieces with iFAST’s business. Investors who can understand the different parts of the company would be able to make more-informed investing decisions.

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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 Lawrence Nga doesn’t own shares in any companies mentioned. The Motley Fool Singapore has a recommendation on iFAST Corporation.