iFAST’s Share Price Climbed 37% in Three Weeks: Is it Time to Sell the Stock?


iFAST Corporation Limited (SGX: AIY) has seen its share price increase sharply over the last few weeks.

The fintech company’s share price has jumped by 37% in three weeks, closing at S$7.55 as of 14 November 2023.

Investors may be puzzled by this sudden surge and wonder if the company’s share price may have run ahead of its fundamentals.

Could it be a good time to sell the stock because it is expensive, or could there still be potential for more gains down the road?

We dig into iFAST’s latest developments to determine the course of action investors should take.

A sharp jump in net profit

Investors may be feeling bullish about iFAST after the company reported a sparkling set of earnings for the third quarter of 2023 (3Q 2023).

Total revenue jumped 23.8% year on year to S$66.2 million while operating profit more than tripled year on year to S$11.2 million.

Net profit quadrupled year on year from S$2.1 million to S$8.5 million.

Meanwhile, the fintech also reported that its assets under administration (AUA) hit a new record high of S$19.12 billion as of 30 September 2023.

Net inflows also stayed healthy at S$751 million for 3Q 2023 and came in at S$1.62 billion for the first nine months of 2023 (9M 2023).

Elsewhere, iFAST’s fixed income division also experienced turnover exceeding S$700 million for 3Q 2023 with investors flocking to bonds, in line with the rising interest rate environment.

In line with the strong results, the group declared an interim dividend of S$0.013, similar to last year.

The promise of a (much) better 2024

Aside from the good results, investors are also feeling optimistic about the fintech for 2024.

2023’s profitability is already expected to be higher than that of 2022, but iFAST has guided for “robust growth” in revenue and profitability for 2024.

The reason for this optimism boils down to the initial one-month contribution from iFAST’s Hong Kong ePension division.

This maiden contribution helped to drive higher profitability for its Hong Kong division, with net profit for the country more than tripling year on year to S$6.8 million for 3Q 2023.

With this project on track for more contributions, investors can expect a full quarter of contribution for 4Q 2023 that should not just boost iFAST’s Hong Kong division, but also the group’s overall revenue and net profits.

The ePension division is slated to commence onboarding in 2Q 2024 with full operations anticipated by 2025.

Source: iFAST’s 3Q 2023 Presentation Slides

The group is sticking with its projections for both revenue and profit before tax contributions as shown above for this contract.

ORSO and iFAST Global Bank

Apart from the ePension contributions, the group also has two other catalysts that may boost its top and bottom lines in the coming years.

The first is the launch of ORSO pension services back in June 2023.

ORSO is a retirement protection scheme set up for employees in Hong Kong that is similar to the Mandatory Provident Fund (MPF).

iFAST expects ORSO to start making a sizable contribution to Hong Kong’s AUA beginning 1Q 2025.

Thereafter, the inclusion of ORSO Pension Services should make a material and positive contribution to both revenue and profitability for iFAST’s Hong Kong division.

iFAST also has a digital bank division called iFAST Global Bank (iGB).

Back in January 2022, the fintech forked out S$73 million to purchase this UK digital bank to further its ambitions to build a “truly global business model”.

iGB’s deposit book grew significantly since the start of this year, going from S$96.6 million to S$232.1 million as of 3Q 2023.

Although iGB made a net loss of S$6 million for 9M 2023, CEO Lim Chung Chun expects the digital bank to break even in the second half of 2024.

Should iGB make a profit in 2025, it could further increase the group’s profit base and add another feather to its cap.

Get Smart: High probability of increased dividends

The surge in iFAST’s share price seems justified considering the above.

Not only has the fintech reported a stellar set of earnings, but it also has several visible catalysts that can further grow its revenue and profits for 2024 and 2025.

CEO Lim has also hinted at an increase in dividends next year as the group expects profits to “substantially increase”.

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Disclosure: Royston Yang owns shares of iFAST Corporation Limited.

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