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iFast Corporation Ltd: Growing Assets and Overcoming China Hurdles

The first part of our coverage on iFast Corporation Ltd’s (SGX: AIY) earnings brief focused on its goal of securing a digital banking license in Singapore. This section will cover what makes iFast different, how it can manage to continue growing assets under administration (AUA), and the strategies it’s using to overcome obstacles in China.

Empowering financial advisors

iFast believes its key strength as a fintech company is that it builds its own software from the ground up. This enables the group to scale easily and also incorporate various asset classes onto its platform, while banks and financial institutions who purchase software off the shelf often face difficulties in upgrading their systems or integrating new aspects into it.

iFast Global Markets recently released an app to bridge the gap between financial advisors and do-it-yourself investors. The aim of this app is to empower financial advisors to provide more holistic and comprehensive wealth management services for their clients. Lim believes purely transactional broker-assisted trades will eventually be phased out, but there is always a demand for an intermediary who can integrate various aspects of a client’s financial goals and targets in order to devise a comprehensive investment plan.

Growth through bond market offerings

AUA growth has been driven largely by the liberalisation of the bonds (i.e., fixed income) space. In Malaysia, the bond seasoning framework has allowed retail investors to execute bond trades on a 24/7 schedule, and this has greatly increased the bond subscription trades. Fixed income remains dominated by the banks due to a lack of pricing transparency and easy liquidity, and iFast has identified opportunities to tap into this demand in order to enable easier access and price discovery for clients.

Navigating the regulatory landscape in China

iFast saw its AUA in China shrink by 9.1% year on year to S$83.7 million due to significant redemptions from institutional investors, largely thanks to the ongoing US-China trade tensions and volatility and uncertainty from China’s fixed-income segment. The regulatory environment in China is going through changes, with the regulator clamping down on smaller players who are skirting necessary laws. The group feels that in the short term, it will be disruptive for the industry, but over the long term, such a strengthening of the regulatory regime can only be good for established companies like iFast.

iFast remains on strong footing for future growth

The group has the right elements in place for future growth, and AUA will naturally fluctuate as financial markets gyrate with political events and economic news. The overall trend for AUA is still positive and growing, as Asia represents a large market for iFast to tap on. At iFast’s last traded price of S$1.13, the shares offer a trailing dividend yield of 2.8% and are trading at a historical price-to-earnings ratio of around 28 times.

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The information provided is for general information purposes only and is not intended to be personalized investment or financial advice. Motley Fool Singapore contributor Royston Yang owns shares in iFast Corporation Limited. The Motley Fool Singapore has recommended shares of iFast Corporation Limited.