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iFAST Corporation Ltd’s 2018 Second-Quarter Earnings: 10% Rise in Dividend

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. Currently, it has a presence in Singapore, Hong Kong, Malaysia, China and India.

On Saturday (28 July), the company announced its financial results for the second quarter ended 30 June 2018.

Revenue for the quarter rose 25.4% to S$30.9 million. The higher revenue was due to growth in the group’s business and asset under administration (AUA) for both the business-to-customer and business-to-business divisions. iFAST’s AUA rose 22.2% year-on-year to a record high of $8.33 billion, as at 30 June 2018. The company’s continuing efforts to widen its range of investment products and services, and strengthen its platform’s financial technology capabilities have borne fruits.

Singapore was the major contributor to revenue. Sales from Singapore climbed 15.4% to S$20.5 million mainly because of higher investment trading volumes in bonds, exchange-traded funds and stocks during the period.

Net revenue (revenue earned after commission and fee paid or are payable to third-party financial advisers) surged from S$12.0 million last year to S$15.0 million in the latest quarter, up 25.2% year-on-year. Recurring net revenue grew 22.6% to S$12.2 million while non-recurring net revenue surged 38% to S$2.8 million.

Profit attributable to shareholders rose 40.4% to S$2.9 million. Excluding the China operation, which is still loss-making, net profit would have grown 26% to S$4.0 million. The China business saw losses of S$1.06 million in the reporting period, an improvement from negative S$1.08 million a year ago.

On a half-year basis, revenue went up 32.3% S$61.9 million, net revenue improved 26.9% to S$29.3 million while net profit grew 46.1% to S$5.7 million.

As of 30 June 2018, iFAST had S$25.8 million in cash hoard with almost no debt. In comparison, at the end of last year, it had S$30.9 million in cash balance and negligible borrowings. Even though the company’s net cash position has fallen, its balance sheet remains rock-solid.

For the quarter, iFAST generated S$9.4 million in cash flow from operations, and S$456,000 was spent on capital expenditure. Therefore, it raked in S$8.9 million in free cash flow. In comparison, at the end of the second quarter last year, it had S$1.3 million in free cash flow.

iFAST shareholders would be delighted to know that the company has increased its interim dividend to 0.75 cents per share for the latest quarter, up from 0.68 cents per share a year ago.

The company has made an application to the Hong Kong Monetary Authority for a virtual banking licence in Hong Kong. However, it said that there is no guarantee that the application will be successful. If successful, iFAST believes that “the growth potential of the Group can be substantially enhanced in the medium to long term”. The company has also set itself a target of achieving S$100 billion in group AUA by 2028.

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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 owns shares in iFAST Corporation Ltd.