SINGAPORE (Apr 30): DBS Vickers Securities is maintaining “buy” on iFAST Corp with a target price of $1.26, after the wealth management fintech player last week reported improved revenue and overall profitability in its latest set of 1Q18 results.
See: iFAST's 1Q earnings double to $2.8 mil on higher revenue & record assets under administration
In a report on Monday, lead analyst Ling Lee Keng notes how iFAST has made significant progress over the last 2-3 years, in her view, by broadening its range of investment products and services while building the foundations to kick-start its business in China.
“The group is now a more integrated wealth management platform, with five key product groups – unit trusts, ETFs, bonds, stocks and insurance. This would strengthen its position as a key wealth management fintech player,” opines Ling.
DBS’s forecasts for 8% growth in AUA for FY18, and another 5% for FY19, remain unchanged.
Given iFAST’s position as a cash-led business supplemented by a relatively high dividend payout ratio of about 60%, the research house continues to value the stock using the Dividend Discount Model (DDM) methodology, resulting in a $1.26 target price which implies 40% upside.
Further, Ling see even more room for iFAST to grow its assets under administration (AUA), as she believes the current AUA level remains small relative to the size of Singapore’s wealth management industry, as well as the other Asian markets in which the company operates.
“In the medium- to long-term, iFAST believes that there is still a lot of room for growth in its AUA as the amount remains small relative to the size of the wealth management industry in Singapore and Asia. Going forward, increasing focus will be channelled towards gaining scale as a platform,” says the analyst.
As at 12.57pm, shares in iFAST are trading 0.6% higher at 90 cents or 23.3 times FY18 earnings.
