Brokers’ take: CGS-CIMB expects iFast’s ePension project to go as planned, upgrades to ‘hold’
Zhao Yifan
CGS-CIMB has upgraded its call on iFast to “hold” from “reduce”, and raised its target price to S$4.90 from S$3.50, as it expects stronger contributions from the global digital banking and wealth management platform’s ePension project.
The ePension project is designed to provide digital operation and administration services to Hong Kong Monetary Provident Fund (MPF) schemes.
The stronger confidence comes after the MPF authority (MPFA) reaffirmed that iFast’s ePension project was progressing as planned.
The MPFA said the software development of the ePension platform was largely completed last month, and that the platform is on-track to be fully operational in 2025.
Analyst Andrea Choong wrote on Thursday (Jul 27) that the revised S$4.90 price target factors in the earnings visibility from the ePension project, and assumed an approximately 30 per cent discount due to potential integration challenges of the new platform.
If no integration issues crop up, the target price could be raised to as high as S$5.60.
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The boost in confidence is further a result of iFast’s steady growth in the recent quarters, particularly the group’s positive performance for Q2 FY2023, which Choong views as confirmation that the ePension project is progressing as planned.
Despite the stronger price target, she expects iFast’s banking division to remain loss-making for FY2023 and FY2024, as the company expands its product suite.
The revenue inflow from the new Occupational Retirement Scheme Ordinance (ORSO) project would depend on the pace of new sign-ups from trustees and partners.
Contrary to iFast’s forecast that the project will become profitable in Q1 2025, Choong believes that operational delays will continue to dog the performance of iFast’s banking division.
“We understand from iFast that it has secured firm indications of interest (for new sign-ups) from several parties. Operational delays in starting up its ORSO project is a downside risk,” she said.
As at 11.06 am on Friday, iFast shares were up by S$0.14 or 2.6 per cent at S$5.60.
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