WEALTH management platform iFast Corporation : AIY 0% is looking at its Hong Kong e-pension business segment to boost its revenue and profitability for the next three years, chief executive Lim Chung Chun said.

In a call on Wednesday (Feb 15) to discuss the company’s latest financial results, Lim said he is expecting the group’s e-pension business in Hong Kong to begin contributing to its financials in “a significant way” in the later part of this year. In 2024, iFast will book a full-year contribution from this business, Lim said. 

“We are looking at the (Hong Kong) e-pension division to be an important driver of growth in the next three years,” he added. But the growth of this division will taper off after 2025. 

iFast’s other business segments – such as stocks, bonds, unit trusts and portfolio management services – are pegged to short-term market conditions. 

But the e-pension division will not be subject to market volatility because it is a “service fee”, Lim said. The group therefore has a “comfortable knowledge” of the revenue this segment will bring this year. 

iFast is maintaining its guidance for the Hong Kong business that was issued in April last year. The group is aiming to hit gross revenue of more than HK$400 million (S$67.9 million) in 2023 and profit before tax of more than HK$100 million. 

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In 2025, gross revenue is expected to exceed HK$1.6 billion and profit before tax is expected to surpass HK$500 million. 

On Tuesday, iFast posted an 82 per cent fall in net profit to S$1.3 million for its fourth fiscal quarter ended December. Revenue for the quarter was down just 13 per cent to S$47.4 million. 

In 2022, iFast faced a situation where revenue stagnated at some point in the year and costs increased, which impacted profitability, said Lim.

Key factors that dragged the group’s earnings included an estimated impairment allowance of S$5.2 million on the back of business restructuring in iFast India, preparations for its e-pension division in Hong Kong, as well as other “important strategic investments” the group had made over the year that clashed with tough global financial market conditions.

Although net profit fell substantially this financial year compared to last year, the group’s proposed final dividend payout was kept at a S$0.014 per share. 

Although profitability will improve this year, Lim said iFast will not “rush to raise (its) dividends”, and the bulk of the year’s dividend payouts will be “similar to last year”. 

However, shareholders can expect “further growth” in dividends from 2024, he said.  

In particular, iFast is expecting the China market to “continue to remain tough” in the short term, but Lim said the group will try to “contain” its losses by managing costs. 

Despite the stumble in the company’s Q4 results, Lim said iFast is looking to adopt a “global business model”. The acquisition of an 85 per cent stake in UK-based iFast Global Bank (formerly known as BFC Bank) back in January last year is one move that will help the company reach this goal, Lim said. 

In the near or medium term, iFast will look to secure customers in various countries without having to set up physical offices in each country, Lim said.

Over the past year, shares of iFast have fallen about 15 per cent, which Lim said “reflects the fact that business profitability has been reduced”.

But the company’s shares have steadily been over the S$5 mark despite a recent downgrade in January from DBS to “fully valued” on the back of reduced earnings estimates. The bank had also cut the company’s target price to S$3.98 from S$4. 

Lim said there could be some understanding from investors on the potential of the e-pension business. Long-term investors will always look at the potential of the business despite any short-term pull back or disruption, he said.