iFAST 1Q24: Firing on all cylinders

Disclosure: I own shares of iFAST and this post isn’t investment advice.

“ iFAST Group is steadily increasing its capability and presence as a global digital banking and wealth management group, with iFAST Global Bank as part of its global Fintech ecosystem”

Buckle up! The above statement says it all. The next few quarters are going to be a real roller-coaster for iFAST as they execute on their digital banking and ePension targets.

Revenue and earnings

iFAST posted another record quarter for earnings with net profit growing 387% y/y because of ePension contributions. Earnings could accelerate again over the next few quarters once the eMPF trustees begin onboarding. iFAST will comfortably exceed their profit targets even if you just annualize 1Q24 pretax profit.

Higher cash flow from the ePension segment should also materialize over the next few quarters with eMPF gaining momentum.  

Deposit growth

Net inflow of deposits grew 43% q/q with iFAST Global Bank (IGB) adding S$156 million of deposits during the quarter. Deposit growth was driven by both new and existing customers with IGB mainly holding cash at the central bank and investment grade bonds. Digital personal banking is expected to be the biggest growth driver over the next few years. I’ll like to see deposit growth accelerate further to $200m per quarter because their existing net interest margin is around 1%. IGB is aiming to break even by end-2024.

Even if they don’t hit this target, there could be revenue synergies from IGB and their core wealth management product. Customers depositing cash today may buy unit trusts and stocks from iFAST someday.

Net inflows

Net inflows grew 109% y/y in the first quarter of 2024 with the company continuing to invest in their core wealth management capabilities. iFAST talked about plans to roll out a same-day SGD cash auto-sweep product using their in-house fund management unit. Earning 3.2% per year in a SGD money market fund with same-day withdrawal sounds pretty exciting! iFAST Hong Kong also launched product financing services in the first quarter of 2024.

Valuation

 iFAST is trading at around 36x 2024 earnings if you simply annualize this quarter’s earnings per share or 53x trailing earnings. Not exactly cheap but not expensive either if you expect the company to hit their Hong Kong profit targets. I bought some shares over the last three months and might add more if the forward PE drops below 30x. The best is yet to be!