After surging from $1.00 in 2020 to an incredible high of $10 in 2021, how will iFAST share price unravel in 2022? The spell-binding run of iFAST share price was certainly stuff of legend among SGX stocks. Given that the counter has recently stalled at $6.00 levels, is it a good time for investors to enter?
For background, iFAST is basically an online platform company offering investment products to retail investors. At the same time, financial institutions and banks can distribute their investment products through iFAST’s platform. The supersonic boom of iFAST share price was due to the award of Hong Kong ePension scheme in early 2021. iFAST partnered with Hong Kong’s PCCW (owned by Li Ka Shing’s son Richard Li) to develop the digital platform for Hong Kong’s HK$1 trillion Mandatory Provident Fund.
According to the latest disclosure by iFAST, the ePension division is expected to be the biggest driver for revenue and profits from 2023. This means that the project should be operationalized by end 2022. From now till end 2022 is less than a year. Against this backdrop, there should be tremendous catalyst for iFAST share price to take off within these two years.
For perspective, the management shared in the latest financial guidance that the net revenue target from the Hong Kong division should be more than HK$800 million in 2024 and HK$1.2 billion in 2025. In comparison, the revenue and profit for FY2021 amounted to just $216 million and $30 million respectively. For this reason, the Hong Kong ePension project could be a massive game-changer for iFAST share price.
One of the things I like about the Hong Kong ePension project is that it will add a recurring stream of service fees to the Group. iFAST business model predominantly involves growing their assets under administration (AUA). Therefore, higher AUA will generally lead to higher revenues. Currently, recurring income accounts for more than two thirds of net revenue. With the implementation of Hong Kong ePension, the growth of iFAST share price should be sustainable in the next five years. Question now is, what is the appropriate entry price?
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in iFAST before. Whether iFAST share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions
iFAST share price at cross-roads
iFAST share price has corrected to a sensible level. When FAST share price was traded at $5.10 in January 2021, the Price/Earning (P/E) amounted to a staggering 98.6! This is certainly a mind-blowing valuation of iFAST and surely one of the highest in SGX. However, the placement of 14 million new shares in early 2022 has knocked the wind out of iFAST share price. That placement was meant to fund the acquisition of BFC Bank but ended up causing a crisis of confidence on iFAST share price.
Year-to-date, iFAST share price collapsed 27%. The uncertainty of iFAST share price may be due to questions over [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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