iFAST Corporation - CGS-CIMB Research 2022-07-26: Taking A Hit From Impairments & Opex

iFAST Corporation - Taking A Hit From Impairments & Opex

  • iFAST (SGX:AIY) reported a core net loss of S$2.7m in 2Q22, against Bloomberg consensus S$8.3m estimate (1H: 13% of FY22). The loss was primarily due to a one-off S$5.2m impairment charge taken as iFAST exits its onshore platform service business in India due to a regulatory change disallowing the use of pool account for mutual fund transactions effective 1 Jul 22.
  • Adjusting for the impairment, iFAST would still report weaker operating profit of S$2.3m in 2Q22 (-69% q-o-q, -73% y-o-y) due to heftier opex (+30% q-o-q, +50% y-o-y) for staff costs (increments, headcount, equity-based share payments), as well as IT spending, technology security services, Hong Kong ePension operating costs and transaction costs relating to the acquisition of its UK-based bank.
  • Although net revenue was boosted by ~S$3.9m from the commencement of its banking operations in UK, earnings from its core trading platform business dipped 8% q-o-q (-1% y-o-y) on the back of weak market sentiment amid volatile financial markets.
  • iFAST’s exit from its onshore business in India will reduce AUA by ~S$300m, but the group will still offer fintech solutions in India.
  • iFAST's management reiterated its guidance for overall revenue growth in FY22F, but for net profit to substantially decline given initial operating losses from its banking segment (estimated ~S$4m in FY22F) and increased opex for its new initiatives.
  • Losses in China widened further to S$1.9m in 2Q22 (-8% q-o-q, -32% y-o-y) as poor market performance impacted investment sentiment.
  • iFAST's earnings upside from FY23- 25F will largely depend on the ramp-up of its ePension project.
  • Downgrade iFAST to HOLD with a lower target price of S$4.

Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.

Andrea CHOONG CGS-CIMB Research | https://www.cgs-cimb.com 2022-07-26
SGX Stock Analyst Report HOLD DOWNGRADE ADD 4.00 DOWN 7.600

Read also CGS-CIMB's most recent report:
2022-10-28 iFAST Corporation - Weak Markets & Start-Up Losses

Target prices by 2 other brokers at iFAST Target Prices.
Listing of broker reports at iFAST Analyst Report.

Relevant links:
iFAST Share Price History,
iFAST Announcements,
iFAST Dividends & Corp Actions,
iFAST News Articles


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