Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Asia’s leading multi-asset exchange

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Equity Bottom-Up

<div><em><strong>Non- SGX Report: These equity research reports are not written by the SGX.</strong>&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></div>
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<p>COMPANY RESULTS</p>
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<h2>iFAST Corporation (IFAST SP)</h2>
<h3>3Q20: Results In Line; Solid AUA Growth; Downgrade To HOLD</h3>
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<p><strong>Fintech firm iFAST’s 3Q20 net profit (+151% yoy) reached another quarterly peak on strong growth in AUA to a record S$12.59b. Management reaffirmed its AUA target of S$100b in 2028. We are downgrading the stock to HOLD as current share price offers less than a 10% upside to our target price of S$3.34.</strong></p>
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<p><strong>RESULTS</strong></p>
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<li><strong>3Q20 results in line.</strong> Fintech wealth management platform iFAST Corporation (iFAST) bagged another record quarterly net profit in 3Q20 with net profit of S$6.2m (+151% yoy), mainly due to the strong growth in assets under administration (AUA). 9M20 net profit was S$14.3m (+120% yoy), or 68% and 84% of our and consensus full-year forecasts respectively.</li>
<li><strong>AUA at record S$12.59b</strong>. Net inflows of client assets were S$1.07b in 9M20, with 60.5% stemming from unit trusts. This pushed the group’s AUA to above our estimate, at a new high of S$12.59b (2Q20: S$11.15b, 4Q19: S$10b), attributed to the accelerated digital adoption in the wealth management industry. During the analyst briefing, management reaffirmed its AUA target of S$100b in 2028.</li>
<li><strong>Rising operating leverage</strong>. The higher AUA helped net an impressive 33.3% yoy jump in 3Q20 revenue to S$45m, while commissions and fees paid rose at a slower 30.8% yoy. This resulted in net revenue margin expansion to 50.8% (+0.9ppt yoy, -0.6ppt qoq). Furthermore, improved operating leverage was achieved as staff cost (+25.5% yoy) was well under control, resulting in better EBIT margin of 16.5% (+8.2ppt yoy, +1.6ppt qoq).</li>
<li><strong>Interim dividend</strong>. On the back of strong operating cash flow generation, iFAST raised its interim dividend to 0.8 S cent/share (3Q19: 0.75 S cent), bringing 9M20 dividend to 2.3 S cent (9M19: 2.25 S cent). However, management cited that dividend payout ratio could reduce going forward as it works to retain sufficient capital should expansion is needed.</li>
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.

COMPANY RESULTS




iFAST Corporation (IFAST SP)
3Q20: Results In Line; Solid AUA Growth; Downgrade To HOLD







Fintech firm iFAST’s 3Q20 net profit (+151% yoy) reached another quarterly peak on strong growth in AUA to a record S$12.59b. Management reaffirmed its AUA target of S$100b in 2028. We are downgrading the stock to HOLD as current share price offers less than a 10% upside to our target price of S$3.34.






RESULTS





3Q20 results in line. Fintech wealth management platform iFAST Corporation (iFAST) bagged another record quarterly net profit in 3Q20 with net profit of S$6.2m (+151% yoy), mainly due to the strong growth in assets under administration (AUA). 9M20 net profit was S$14.3m (+120% yoy), or 68% and 84% of our and consensus full-year forecasts respectively.
AUA at record S$12.59b. Net inflows of client assets were S$1.07b in 9M20, with 60.5% stemming from unit trusts. This pushed the group’s AUA to above our estimate, at a new high of S$12.59b (2Q20: S$11.15b, 4Q19: S$10b), attributed to the accelerated digital adoption in the wealth management industry. During the analyst briefing, management reaffirmed its AUA target of S$100b in 2028.
Rising operating leverage. The higher AUA helped net an impressive 33.3% yoy jump in 3Q20 revenue to S$45m, while commissions and fees paid rose at a slower 30.8% yoy. This resulted in net revenue margin expansion to 50.8% (+0.9ppt yoy, -0.6ppt qoq). Furthermore, improved operating leverage was achieved as staff cost (+25.5% yoy) was well under control, resulting in better EBIT margin of 16.5% (+8.2ppt yoy, +1.6ppt qoq).
Interim dividend. On the back of strong operating cash flow generation, iFAST raised its interim dividend to 0.8 S cent/share (3Q19: 0.75 S cent), bringing 9M20 dividend to 2.3 S cent (9M19: 2.25 S cent). However, management cited that dividend payout ratio could reduce going forward as it works to retain sufficient capital should expansion is needed.













Non-SGX Report: IFAST Corporation 3Q20: Results In Line; Solid AUA Growth; Downgrade To HOLD