iFAST, a large Singapore-based investment platform is one of my earliest and largest positions since 2017 so I have been grateful for the recent ~100% jump in the share price. Here are 3 reasons why I haven’t sold any of my shares.
- iFAST operates a large non-bank investment platform in Singapore but the company is still tiny compared to its peers operating in wealth management cities. Consider Hargreaves Lansdown and Charles Schwab. Like iFAST, Hargreaves Lansdown and Charles Schwab operate investment platforms in large financial hubs such as the United Kingdom (Hargeaves Lansdown) and the United States. Net revenue and assets under administration for both companies is 10-20 times larger than iFAST which suggests an exciting future for iFAST. Similarly, the net profit margin for Hargreaves Lansdown and Charles Schwab is much higher than iFAST which points to margin expansion potential for iFAST.
|SGDm||iFAST||Hargreaves Lansdown||Charles Schwab|
|Net revenue (LTM)||72||996||14,122|
|Net profit (LTM)||14||567||4,446|
|Net profit margin||19%||57%||31%|
|Assets under administration (SGD bn)||11||188||5,848|
2. iFAST operates in Singapore and Hong Kong which are huge financial hubs with many opportunities for iFAST to increase its client base and net revenue. iFAST is aiming for assets under administration (AUA) to reach SGD100 billion by end-2028 which implies ~29% CAGR from end-2019 levels. This growth rate is in-line with the company’s 2018-19 AUA trend. iFAST’s SGD11 billion AUA has plenty of room to grow compared to Singapore’s overall wealth management market (SGD3.4 trillion) and Singapore’s unit trust market (SGD100 billion). iFAST is also bidding for a Singapore digital wholesale banking license. Securing a banking license will be a tough challenge with larger competitors such as ANT Financial bidding for the license. If iFAST succeeds in getting the banking license against all odds, this will accelerate the company’s AUA growth vision.
3. iFAST secured a Malaysia stockbroking license in August 2020. iFAST Malaysia was previously limited to selling unit trusts and bonds so this stockbroking license should lead to a big jump in revenue. Consider iFAST Singapore: Securing a Singapore stockbroking license led a 44% increase in net revenue for the Singapore segment from 2016-19. With iFAST’s Malaysia platform offering a wider variety of products, growth should pick up.
iFAST is trading at 47x trailing earnings or 35x trailing earnings if we exclude losses from China operations so the company is clearly not cheap. With many growth drivers and a large addressable market, I’m happy to hold on to my shares but I won’t be adding any large positions at these levels!