SINGAPORE (Feb 20): RHB is remaining “neutral” on iFAST Corporation with a lower target price of 79 cents from 88 cents previously, after the online investment platform on Friday posted a 55% decline in FY16 earnings.
The group cited tough market conditions as the main cause for drop in earnings, mainly due to a soft 1H16.
(See also: iFAST posts 55% fall in FY16 earnings to $5.4 mil)
In a Monday report, analyst Jarick Seet says he expects costs to continue dragging down on iFAST’s profitability going forward, especially with the group’s China losses, even though its new investment product categories are “faring relatively well”.
“Due to smaller margins, [the company’s management] estimates that it needs over $1 billion in assets under administration (AUA) in order to break even,” says Seet.
“Although its AUA stands at 72.4%, revenue dipped by 1.7% y-o-y in FY16. Management expects to re-launch its stock trading capabilities for its FSM One platform in 2Q17, with direct links to the Singapore Exchange. The platform would enable access to the broad range of wealth products that iFAST offers,” he adds.
Going forward, the analyst expects iFAST’s capex to possibly increase to $6-7 million next year while the group improves its fintech capabilities and widens its product offerings.
As at 11.15am, shares of iFAST are trading flat at 86 cents.
