I decided to take a closer look at the them to decide if I should add more to my initial holdings. I will start with iFAST as I am most excited about it after scanning through their latest annual reports.
What do they do?
Listed on SGX on 11 December 2014, iFAST business revolves around internet-based investment products distribution platform with assets-under-administration (AUA) of about 6.1 billions. It has presence in Singapore, Malaysia, Hong Kong and China. Two main business divisions, business-to-business (B2B) and business-to-consumer (B2C) with B2B contributing 75% of revenue in 2016. About 83% of its net revenue is recurring.
Recent development, results and price movement
iFAST has a strong rebound in their 20171H results. Revenue was up by about 20% and net profit up by 75% but this came from a weak 20161H results. The poor results in 2016, a 55% drop in EPS has caused the share price to plunge from $1.35 to $0.85 for that year. The price continued to slide in 2017 till April to reach a low $0.60. The release of its strong results this year has resulted in a strong rebound of its share price, reaching a high of $1.1+ in June.
It has also launched its SGX stockbroking service in June 2017 after being admitted as a Trading Member of Singapore Exchange Securities Trading Limited (“SGX-ST”) and a Clearing Member of The Central Depository (Pte) Limited (“CDP”).
Based on what I read on the annual reports and action taken by the company, I think iFAST Chairman, CEO and co-founder Lim Chung Chun is a forward looking and strong leader who drives the company to put their company values (Integrity, Innovation and Transparency) into action. The following is the final paragraph from 2016 report.
"We are aware that our approach may sometimes cause disruption in the financial sectors that are often dominated by traditional business approaches and mores on how investors should be treated – if it means these disruptive changes we are introducing are pro-client, we will continue to remain steadfast in achieving this outcome in the markets we operate in. When changes are pro-client, we are confident we will succeed in the longer term despite shorter-term challenges."
And I do not think it's just talk. Fundsupermart.com in 2000, FSM Mobile in 2011, Bondsupermart in 2015, and robo-advisor last year are evidences that show that the company is among the first movers.Crunching the numbers
With the exception of 2016, iFAST has grown both its top and bottom lines, with its EPS growth outpacing its net revenue growth.
Base on the above data, I believe the company should be able to continue to grow its earning at a rate of 20% to 30% for the next few years.
Together with the rest of the market, iFAST's price has rebounded quite a bit since the beginning of October and closed at $0.96 on 6 October. Forward PE based on the current price and projected EPS is about 26x. Assuming I am right about its ability to grow at 20% to 30% in the next few years, forward PEG ranges from 1.1 to 1.3. My personal take is that it is fairly priced with potential to surprise on the up side but risk still lingers.
When will I sell?
These four rules still apply.
a. The fundamentals of the company has deteriorate
b. The company is overvalue at the current price
c. To raise cash for a better buying idea
d. To raise cash for other reasons
My first encounter with the company was more than a decade ago when I opened my Fundsupermart account. Did not really use its services as I was on dollardex then. Recently, I wanted to explore its FSMone platform for stock trading and hence decided to register an account. Apparently my record is still in their data base and I need to re-activate my account which I will probably do by the end of the year.
As an investing idea, I came across it somewhere in late 2015 but the PE was crazy then. The sell down due to poor results in 2016 and the recent correction provides me an opportunity to buy a small stake in the company.
I can sense my excitement as I read the development of iFAST over the years and imagine what more can come from them in years to come. Hence, I decided to buy more yesterday at a price of $0.975 (yes, I am not good at market timing). Together with my initial purchases, my average price is $0.93.
I am prepared to add more to this counter at the appropriate junctures.