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Broker's take: DBS expects iFast's growth to outpace industry, ups target price

DBS Group Research has increased its target price for Singapore-based wealth management and brokerage platform iFast Corp to S$2.60 from S$2.35, and maintained its "buy" call.

The research team said in a note on Tuesday that it expects iFast to grow more quickly than the rest of the industry, riding on its scalable business model and expanded product range.

In its earlier years of business building, the group's assets under administration (AUA) growth had roughly tracked the industry's growth. However, for FY16 to FY18, iFast's AUA's three-year compound annual growth rate was18 per cent, surpassing the industry's 12 per cent, noted DBS.

The fintech firm's growth in recent years was thanks to the expansion of its product range - both in depth and breadth - coupled with the launch of its business-to-consumer division FSMOne in Singapore in FY16.

DBS analyst Ling Lee Keng said that as the coronavirus pandemic accelerates the pace of digitalisation, iFast will be a "clear beneficiary" of the growing adoption of fintech services given its scalable online-based business model. This will also enable the company's growth to continue to outpace the industry. she added.

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DBS upped its AUA growth assumption for iFast to 15 per cent for FY20 and FY21 each, from 12 per cent previously.

"We believe there is still room for growth as the as current AUA levels (of S$11.15 billion) remain low, at about 10 per cent of the around S$100 billion in assets under management of the authorised and recognised collective investment schemes in Singapore," Ms Ling said.

"Recent developments bode well for iFast. The group is in the bidding for more large-scale projects, which could be a game changer if awarded," she wrote. iFast is part of a consortium vying to operate Hong Kong's digital pension system, and is also gunning for a digital wholesale bank licence in Singapore.

If iFast wins the digital bank licence and/or the Hong Kong pension project, these will create additional revenue streams and further enhance its range of products and services, DBS noted.

Compared to other analysts, DBS is more optimistic on iFast given the group's scalable business model and the drive towards digitalisation, Ms Ling said.

Last week, CGS-CIMB downgraded its call on the stock to "hold", although it raised its target price to S$2.44 from S$1.85 previously. CGS-CIMB described the counter as "too fast, too furious", stating that market exuberance appeared to have "substantially" priced in iFast's prospects of winning the Hong Kong and Singapore bids.

Shares of mainboard-listed iFast fell S$0.05 or 2.2 per cent to trade at S$2.21 as at 4.14pm on Tuesday.

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