iFAST's 2024 Earnings: EPS Surprise, Revenue Lag

Alright, fellow investors, let's dive into iFAST Corporation's (SGX: AIY) full-year 2024 earnings report. Buckle up, because it's been quite the ride!

iFAST delivered a record quarter, with a 46% year-on-year increase in net profit to S$19.28 million. Now, that's what I call a party! But wait, there's more. The company's earnings per share (EPS) came in at over S$0.35 for FY 2025, a near 60% increase from the previous year. Talk about a stock that knows how to throw a punch!

However, the revenue side of things wasn't quite as rosy. Revenue missed analyst estimates by 7.2%, which is a bit of a bummer. But hey, nobody's perfect, right? iFAST's revenue growth projection of 12% p.a. over the next three years is still higher than the average growth forecast for the capital markets industry in Asia, which is estimated at 8.1% p.a. So, let's not throw in the towel just yet.

Now, you might be wondering, "What's driving this EPS growth, despite the revenue miss?" Well, let me tell you, iFAST has got a few tricks up its sleeve.

1. Improved profit margins: iFAST's profit margin increased from 11% in 2023 to 17% in 2024. That's a significant jump, folks! This improvement, along with reduced ePension-related operating expenditures (opex) and a lower-than-expected tax rate, helped offset the revenue shortfall.
2. iFAST Global Bank (iGB) profitability: iGB achieved breakeven in 4Q24, driven by rising net interest income (NII) as deposits reached S$1 billion. Management targets profitability for iGB in FY25, with earnings likely to be driven by NII and peripheral fees, such as forex.
3. Strong performance in the Singapore segment: The robust growth in the Singapore segment, along with the impressive growth trajectory of iGB, contributed to the overall strong performance of iFAST in 2024.

But wait, there's more! iFAST has some strategic initiatives in the pipeline that are expected to drive earnings growth in the coming years:

1. Launch of the ORSO platform in 2Q 2025: The Occupational Retirement Scheme Ordinance (ORSO) platform is expected to commence operations in the second quarter of 2025. This launch is anticipated to contribute to the growth of iFAST's Hong Kong (HK) ePension division, which has already exceeded its targeted profit before tax (PBT) of HK$500 million.
2. Potential collaboration for the Macau pension business: iFAST is exploring a potential collaboration to launch a pension business in Macau, where the addressable market size (AUA) is estimated at HK$293 billion (approximately S$51 billion). This collaboration, if successful, would provide iFAST with access to a significant new market, driving earnings growth through increased revenue and profitability.

So, there you have it, folks! iFAST's 2024 earnings report was a mixed bag, but the company's EPS growth and strategic initiatives have me feeling pretty bullish about its future prospects. Keep an eye on this one, and remember, sometimes it's not just about the revenue – it's about how you use it to drive earnings growth. Happy investing!