ANALYSTS have upgraded their ratings on iFast Corporation : AIY 0% as they project the financial services company to deliver stronger growth in the fiscal years ahead.
In a report on Monday (Apr 29), CGS International upgraded its call on the stock to “add” from “hold” with an unchanged price target of S$9.10.
CGS analyst Andrea Choong said she liked the group’s consistency in executing its ePension project, especially given the company’s recent move to publish the tentative onboarding schedule for all 12 trustees for the project. Such a move “removes the overhang of these earnings contributions” from the projects.
She also projected improving sequential net profit growth for the group in FY2024 to FY2025.
Subsequently, her dividend per share estimate for FY2024 rose to S$0.054, from S$0.048 previously, after factoring in iFast’s interim dividend of S$0.013 for Q1.
Separately, on Friday, DBS Group Research had upgraded its rating on iFast to “buy” from “hold”, while raising its price target to S$9.57 from S$8.33.
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While the research house left its earnings and assets under administration forecasts unchanged, the new price target implies a lower weighted average cost of capital (WACC).
WACC refers to the average rate that a company expects to pay to finance its operations and assets. A lower WACC is typically viewed as a reflection of a lower risk profile.
DBS’ reduction in WACC comes with adjustments of the company’s capital structure with a higher level of debt, which is lower than its cost of equity.
DBS analyst Ling Lee Keng noted that the group’s return on equity ratio has improved in the latest quarter, and is now at 21.9 per cent in Q1 FY2024 – “closer to its peak” of 25.8 per cent in FY2021, and up from 12.2 per cent in FY2023.
In Ling’s view, the outlook for iFast is improving as its key growth driver for 2024 and 2025 – the ePension division – is “progressing well” such that the group is “on track for stronger growth ahead”.
“Furthermore, the core wealth management platform is also steadily advancing while the net margin continues to improve,” observed the analyst.
Shares of iFast were trading 2.5 per cent or S$0.19 lower at S$7.36, as at 3.50 pm on Apr 30.
