EXECUTIVE SUMMARY

• A recent Smartkarma Corporate Webinar | iFAST: Stellar Performance of Singapore's Global Fintech Player introduced one of the few Fintech players in Asia that has been making profits since 2011.
• The successful launch of its HK ePension platform can be highly scalable and is expected to be an important growth driver for the company in 2024 and 2025.
• IFast Global Bank is expected to break even in Q4 this year and to be an important growth driver for the group's next 3-year plan (2025 and beyond). This Insight is part of the Smartkarma Corporate Webinar series, supported by SGX through the Investor Education Fund.

Our thoughts about iFAST (IFAST SP) (after the webinar)

• One of the very few profitable Fintech players

• It is still difficult/refreshing to find a Fintech player in Asia that has been consistently making profits
  • For example, India’s Fintech giant, Paytm (PAYTM IN), is still making a loss and only managed to become EBITDA positive (before ESOP) in the year end of 2022

• However, iFast has been making net profits since as early as 2011, according to its IPO presentations in 2014

• In 2023, the company reported c. SGD 28m net profits after tax, which is ~4.5x that of 2022
• The company had a FY’23 RoE of c. 12% (v.s. c. 5% in FY'22)

• The significance of the Hong Kong ePension division is not only about revenue growth but driving less volatile revenue growth

• Although the majority of the company’s revenue has been recurring (c. 82% of its total net revenue in 2023), the key driver has been the growth of its AUA (assets under administration)
  • AUA could be volatile due to market conditions (e.g., in 2022), which also leads to volatility in the company’s revenue

• Given the successful launch of the ePension division in Hong Kong and its expected increasing revenue contribution, iFast can have more stable revenue growth that is not tied to the market conditions (and hence, less volatility)

• HK ePension platform is a PaaS play that can be highly scalable going forward
  ◦ Management expects ePension to become an important growth driver for the group in 2024 and 2025
   
• It reduced revenue targets (on both gross and net bases) for ePension in 2024 and 2025, but profitability targets (profits before tax) remained the same for 2024 (>HKD 250m) and 2025 (>HKD 500m)

• Other company endevors also continue to bear fruits and pave the way for the group's next 3-year plan

• iFast Global Bank to become an important growth driver for the group in 2025 and beyond
  • This is a key pillar of the company’s aspiration to become a global digital banking and wealth management Fintech platform
  • The bank incurred a loss in 2023 but is expected to break even in 4Q’24

• In Malaysia, Bondsupermarket obtained approval-in-principle from the Securities Commission to be registered as a Recognized Market Operator in Jan this year

• ​​​​The company is targeting to launch its bond marketplace activities in 2H’24 and aims to build a global digital bond marketplace that will allow individual investors to enjoy enhanced price transparency and trading efficiencies

• Key risk included lower than expected contribution from its ePension division, given the sustained tough financial market conditions in HK

Company Background

iFast is one of the few Fintech companies in the region with a global business focus and is listed/headquartered in Singapore. Founded in 2000, the company has established itself as a prominent provider of digital wealth management and investment solutions in Asia and beyond.

The company operates an integrated platform that offers a comprehensive range of financial products and services to financial advisors, financial institutions, and retail investors. Its platform enables users to access a diverse selection of investment products, including unit trusts/mutual funds, ETFs, bonds, stocks, and insurance solutions.

It has now expanded beyond Singapore and operates in multiple markets across Asia, including Hong Kong, Malaysia, and China. In 2022, it further acquired a full-license bank in the UK and renamed it iFast Global Bank, making the group a truly global player.

Overview of the Fintech Landscape in Southeast Asia

1. Limited public Fintech players in Southeast Asia

In recent years, Fintech in Southeast Asia has attracted much attention from investors around the world. But, with regards to allowing public equity investors to gain exposure to the sector, it is still slightly lagging behind, especially compared to China/India, given the very limited number of listed pure-play Fintech players from the region.

Over the past 10 years or so, there have been numerous Fintech companies from China managing to go public, e.g., Lufax Holding (LU US)/Lufax
Holding (6623 HK), ZhongAn Online P&C Insurance C (6060 HK), Qifu Technology (3660 HK), etc. In the case of India, although there are fewer public Fintech companies, more and more players have managed to go public over the past 2 – 3 years, such as Paytm, the country’s Fintech giant, and Policybazaar (POLICYBZ IN), a smaller Insurtech aggregator.

Yet, in Southeast Asia, most Fintech companies are still either private or part of the regional tech giants. For example, Sea Money, which is part of Sea (SE US), or the Fintech business group of Grab Holdings (GRAB US). For now, it is still very difficult for public equity investors to gain pure exposure to just the Fintech sector in Southeast Asia.

2. High growth expected in WealthTech

Different subsectors within Fintech (e.g., digital payments, lending, insurtech, cryptocurrency, WealthTech, etc.) are also at different stages of development in the region.

Digital payments, for example, are definitely the most advanced, thanks to the popularity of e-commerce, online food deliveries, and other new consumer behavior further solidified during Covid.

On the other hand, WealthTech is still relatively nascent as Fintech’s theme in most Southeast Asian countries is still very much about solving the problem of underbanked/unbanked population, rather than helping people make better investments.

But, as the region further develops, with the young, growing populations and rising middle-class households, the demand for having access to investment products, channels, and advice will only grow over time.

3. Singapore leads other Southeast Asian peer countries

Singapore is, without a doubt, a leader across all these Fintech subsectors or verticals in Southeast Asia.

For example, when it comes to Insurtech, on the one hand, for a more developing country in the region, e.g., Indonesia, the focus is on microinsurance or encouraging more people to buy insurance protection. On the other hand, Singapore has one of the highest insurance penetration rates, comparable to some of the most developed markets in Asia (e.g., Japan) and the world.

The same goes for WealthTech. In Singapore, as people generally tend to have more disposable income, they have stronger needs and demand for different investment products and advice.

Hence, Singapore has been a hub for Fintech development and innovations in the region, further taking advantages of the talents available and its regulatory framework. We believe this trend will only continue going forward.