Recently, someone asked me to share one stock I’ll be watching in 2020. I usually refrain from giving a direct answer to questions about stock tips, but after brief consideration, I thought it might be useful to share my process for how I find promising investment ideas.
To do so, I need a candidate. In this case, the idea is iFAST Corporation Ltd (SGX: AIY). Here’s a quick summary of why I find iFAST an interesting candidate to watch.
A quick introduction
iFAST is an internet-based investment products distribution platform with a presence in Singapore, Hong Kong, Malaysia, China, and India. It has two main business divisions; one that caters to consumers (B2C) and one that caters to businesses (B2B).
There are many things to like about the company. We’ll look at two of them – its growth potential and its owner-operator status.
iFast has growth potential
There are many ways iFAST can grow its business, either by growing the asset base of existing customers, increasing the number of customers, signing new financial advisors, offering new services, and more. All of these things will be supported by the tailwinds such as the growth in middle-class consumers, and also the shift towards services offered by financial advisors.
In addition to the existing markets that have reached operational scale (Singapore, Hong Kong, and Malaysia), iFAST operations in China and India are well-positioned to benefit from the rapid growth of the wealth management industry. In fact, the company is so excited about this potential that it set a 10-year growth target for its AUA to reach S$100 billion by 2028.
The company is a leading player in a rapidly growing industry, which positions it well for significant growth over the long run.
iFAST has an owner-operator structure
Another thing to like about iFAST is its owner-operator structure. If you’re new to this, an owner-operator refers to significant shareholders who are also the management of a company.
The senior management team owns about 30% of the company’s existing shares.
Source: iFAST 2018 annual report
Lim Chung Chun (founder, chairman, and CEO) owns 22.2% of iFAST’s shares. As the founder and CEO, Lim’s long-term financial interest is well aligned with those of external shareholders. Lim Wee Kian, on the other hand, is a non-executive director of the company who has extensive banking experience.
Personally, I think having the founder at the helm will allow the company to focus more on its long-term success (rather than any short-term benefits).
The bottom line
I think iFAST is an interesting company to watch for in 2020 and beyond mainly because of its growth potential and owner-operator structure.
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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 recommended the shares of iFAST Corporation Ltd.