iFAST

wealth management is coming of age in China. just be a bit more patient and give it another 2-3 years.

We should see signs of turnaround (e.g. loss per  quarter less than $1mil for China segment) in the next few quarters. The "quantum leap" or marked improvement may take the market by storm. e.g. just need to  sign up a few rich ultra-rich and this will set off the whole chain of positive network effects. the day would come!

*******
Supported by the growth in its B2B2C and in-house wealth adviser business, iFAST China’s AUA grew 16.1% YoY to $101.50 million (approximately RMB 526 million) in 2019.

In October 2019, iFAST China announced to establish a joint venture with RFO Holdings Pte. Ltd., the Singapore office of Hong Kong-based Raffles Family Office (“RFO”), and believes its collaboration with RFO will help to address the rising need for quality wealth management services in the ultra high net worth market in China.

The China Securities Regulatory Commission announced its plan to remove foreign ownership limits in the financial industry in 2019. With the foreign ownership limits on fund management companies set to be removed in 2020, iFAST China believes it is well-positioned to capture the opportunities that will arise from China further opening up its capital markets.

***

In October 2019, the Company, through its subsidiary, iFAST China Holdings Pte Ltd (“iFAST China”) entered into a joint venture agreement with RFO Holdings Pte Ltd (“RFO Holdings”), the Singapore office of Hong Kong-based Raffles Family Office, to establish a joint venture in China to provide family office advisory, business consultancy, introductory services and other advisory services in the Chinese market. 


The joint venture enterprise, namely Raffles Family Office China Ltd, has been completed to set up in Shanghai China with the registered capital of RMB5 million on 3 March 2020. iFAST China and RFO Holdings will each subscribe for 30% and 70% equity interest of this joint venture as per the joint venture agreement executed in October 2019.

if "textbook answer" is any good historical reference, then we can see that iFast in its current "infancy stage" (AUA of only $10billion) is extremely profitable (bearing in mind the heavy capex) and in a NET CASH position.

As this is a platform business, once the critical mass is reached and the positive network effect (while it already has some at the moment) would be self-propagating. We are potentially looking at a 10 bagger, taking into consideration that iFast has set a $100bil AUA target.

https://www.pwc.com/gx/en/services/famil...-asia.html

one need to have a keen appreciation of the wealth management landscape that is emerging in Asian countries, to better understand iFast business model and its ecosystem.

One cannot simply do a textbook comparison with Amazon, etc , and conclude that initial periods will be mired in losses. If so, the losses would have shown up by now and iFast would have been bankrupted a few times in the last decade or so since 2003 SARS, 2009 GFC and NOW.. hahahahaha….(counter party risk ? Accounts have to be pre-funded before transactions are allowed )

Read up more on "Family Office" and you will know that we are just seeing the dawn of big disruption for the wealth management industry in Asia!!

Banks here will not collapse but I see that there will be big disruption. (Family office is quite an established model in EU and USA, etc)

iFast is partnering with all these wealth management platforms (e.g. Raffles family office is just a case in point).

https://www.youtube.com/watch?v=Jt2YMqIflRs

https://www.facebook.com/109255527107153.../?vh=e&d=n

Changing landscape of wealth management industry


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(09-04-2020, 11:55 AM)money Wrote: Perhaps i should add that if i am of the opinion that if ifast sticks to its existing business, it may just have a better chance of making money. But i also find its existing business too small to have a significant scale in the long run. As for management buying back its own shares, well i think many of them are better at running the business than making investment decisions

Just curious, what do you mean by "too small to have significant scale in the long run"?

(09-04-2020, 08:27 PM)karlmarx Wrote: Most of today's large tech companies, like Amazon and Google, get to their present humongous market value and market power by:

1) Providing as much value as possible to the customer. This meant sustaining losses during the early years, and only making a meager positive return in the later years. Debt and equity were sold to finance expansion and better user experience.

2) Having the right people who not only possess the strategy and skills, but more importantly, the patience/endurance, to do whatever it takes to deliver the above.

During their early years, it was never obvious that Amazon and Google will eventually be leaders in their present markets. They had their worthy competitors (ebay and yahoo). And they weren't raking in big bucks. An investor in either companies during their early years had to endure plenty of uncertainty, for the following 10-15 years, before seeing their emerging market leadership.

(11-04-2020, 01:59 PM)EnSabahNur Wrote:

(09-04-2020, 11:55 AM)money Wrote: Perhaps i should add that if i am of the opinion that if ifast sticks to its existing business, it may just have a better chance of making money. But i also find its existing business too small to have a significant scale in the long run. As for management buying back its own shares, well i think many of them are better at running the business than making investment decisions

Just curious, what do you mean by "too small to have significant scale in the long run"?

it is easy to give textbook answer.

Like what I said, if iFast's business model is "too small to have a significant scale in the long run", it would have been mired in heavy losses in the initial years, and would not have survived so many world crisis (starting from dot com, SARS, GFC and COV19).

The business can even generate reasonable dividend (for time being) while paying off heavy capex (details in AR) and maintaining a NET CASH position.

Just pray hard that no big time investors (Shark Investors) come in and offer few hundred mils to take iFast private on the cheap, when it is easily worth a few $bil in the long run...

FACING THE THIRD GLOBAL CRISIS FROM A POSITION OF STRENGTH

As we witness the third global financial crisis in our 20-year history, we note that the Group is in a relative position of strength today. We are now a well-established wealth management Fintech platform with profitable operations in 3 of our 4 key markets. We have put in place a scalable business model with strong levels of recurring income. 

We have strong cash flow generation capabilities, a strong balance sheet with surplus cash, and very little borrowings. Throughout our operating history, we have ensured that we have a business model that does not take on too much risks, and has strong fee income generation. 

Our expanding Fintech ecosystem has allowed us to increasingly broaden our revenue stream, while remaining focused within the wealth management industry. We continue to build on broadening the range and depth of our services, through good and bad times. We are working on the pursuit of a digital banking licence in Singapore, which will substantially improve our growth potential if we are successful. 

Historically, it has been proven that crisis periods are the times when strong companies manage to further strengthen their leads over their competitors. We have every confidence that we will be navigating through this volatile period healthily, with the ability to further strengthen our business potential and competitiveness as the financial markets eventually recover.

https://www.finews.asia/finance/29548-ch...ore-office

look at the market cap of Charles Schwab - >$40 bill, and it had to close down its Singapore office just after a few years!!!

This speaks volume of iFast's achievements in Singapore and other markets. We are potentially looking at a 10-bagger here to say the least...

let's hope iFast is not bought out on the cheap because the chairman owns only ~15%...

Due to Covid-19, MAS will delay the award which was scheduled in June 2020 to 2nd half 2020.

iFast will release its 1Q20 result on 23 Apr 2020 before market opening.

iFast has a visionary leader with proven execution track records.

Strategy wise, it's roadmap for China market is still evolving and we might not be able to see nice profit in near future.
However, iFast is definitely moving in the right direction, judging from the continuously improving business parameters for China.

---

There is a potential catalyst in the company aka Digital Bank Licence in Singapore.
Singapore, being a Global Wealth Management Hub, has a thriving numbers of FinTech startups.
However, these startups remains  and will continue to remain as startup for a long time.

It lacks a leader who can provide a solid wealth management platform to serve the global mass affluent customers and deposits at low costs.

The question of whether iFast could be the right company to lead this space?
Given a chance, I would think so.

We know that iFast had failed it's bid in Hong Kong virtual bankong license.
Technically, it's not iFast but iFast Hong Kong.
It had pushed it's luck too far and failed to win a chance to build a digital platform for the global mass market.
iFast Hong Kong deserved it as it was bidding alone, merely using brute force.

For those who is keen to learn a bit more on Digital Bank, you might want to read on iFast announcement of it's bid.
(click for details)

I see a chance, not a great chance, but a decent chance to build a global scale digital platform for Singapore.

After iFast HK failure, instead of bidding alone, Singapore team bid consists of 2 partners:
1. Yillion Group (亿联集团)
Yillion Group operates one of the four digital banks in China and has Hong Kong-listed 
Meituan Dianping (美团点评) as one of its key shareholders. 
Meituan Dianping is the third largest Chinese Internet company today based on market capitalisation.
2. Hande Group (瀚德集团) 
Hande Group is a leading Fintech company in China, founded by Dr Cao Tong, the former President of 
Webank (微众银行), China’s first digital bank. 

iFast value proposition is simple:
• Singapore has established itself as one of the leading private banking and wealth management centres globally and in Asia. 
It has done well in attracting many high net worth and ultra high net worth individuals from different parts of the world.
• However, iFAST finds that the global mass affluent are not well-served and sees a tremendous opportunity in this space.
• Through integrating its existing wealth management Fintech platform into the digital bank’s offering and leveraging on Singapore’s status as a
wealth management hub, iFAST believes this will allow it to effectively acquire global mass affluent customers and deposits at low costs.
• Deposits acquired will be available for lending, such as to SMEs in Singapore.
iFAST believes that this will bring about a massive spill over effect to the local economy.
• iFAST Corp will own a 65% stake in the proposed digital bank.
• iFAST sees the digital banking business as two main components – deposits and loans.
• The ability to acquire deposits at low cost is key to building a competitive and successful lending business.
• Instead of competing mainly for local SGD deposits, iFAST seeks to better tap into Singapore’s global wealth management hub status to
attract foreign currency deposits.

I feel love!

The question remains whether iFast could be the right company to lead Singapore FinTech success?
Given a chance, I would think so.

What do you think?

Wage support from government is expected to enhance iFast EPS (full year results) by an estimated 2 cents or 56% of last year EPS.

$30mil (wage cost per annum) x 12/13  (adjust for 13th month) x 3.25 months over 12 months (working below) x 75% (adjust for staff with salary higher than $4600) = 5.625 mil or 2 cents EPS 


Working on "3.25 months"
75% for April
75% for May
25% for the rest of the 7 remaining months
total = 325% or 3.25 months worth of wage being supported
(aka windfall from government)