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Qi Jie asked 3 years ago

Hi, I would like to know what I should take note when analyzing iFAST? It is a FinTech Company and I am fairly new to this area. Would be glad to know what are the points I should take note.
Thank you.

Jieren Zheng replied 3 years ago

One of the factors is to look at their AUA (assets under administration). I missed purchasing it (hadn’t got time to look at it then), oh well. Waiting for another chance.

Qi Jie replied 3 years ago

Hey Jieren, I went to read up and google abit as well. I am not too clear about AUA and AUM. Is there a lament explanation for it? AUA seems abit more confusing.

Thank you

Jieren Zheng replied 3 years ago

I would see it as say you buy shares and park them under your brokerage account as custodian, these are assets under administration, but if you put money into a fund, these are assets under management.

Qi Jie replied 3 years ago

So to clarify, AUA is just like I buy the shares myself and pay the commission fee?

And for AUM, is like a mutual fund I have to pay a fee for those fund managers to manage my money?

Also bringing to the context of iFAST, how they collect AUA fees? Or how do the FinTech works/operates?

Jieren Zheng replied 3 years ago

AUA would be you buying shares but those shares are held via custodian by the broker.

For iFast is like a platforms that acts as a bridge for funds/insurance companies to clients, notice they have FSMOne where Financial Advisors can purchase insurance and funds for the clients. There’s commissions and platform fees for both sides I think (I can’t remember offhand now)

Qi Jie replied 3 years ago

Ahh i see, tks alot for the clarification!
And for FinTech what valuation method would be relevant or best to use?

Qi Jie replied 3 years ago

Or for iFast what’s a good valuation method?
I am thinking P/E being one of them as they do not have much assets.

Jieren Zheng replied 3 years ago

I would use PE as they are asset light :) Not sure if others have better valuation metrices.

Qi Jie replied 3 years ago

Alright tks for the explanation Jieren!
Last qn, do you know for FinTech what is the rough reasonable/avg P/E I should be aiming for?

Jieren Zheng replied 3 years ago

Well, I tend to plot the PE for the past 5-10 years for all my counters, and try to buy it below the average of that range (my lazy method), other ways would be peer comparisons, companies which are doing similar in the same industry.

Qi Jie replied 3 years ago

I see, I suppose iFAST is listed in 2014 so for avg PE for the past 5 to 10 years may not be useful.

I guess comparisons with other companies is the best way.
Do you know any other companies listed doing similar thing (may save me some time) 😄?

Jieren Zheng replied 3 years ago

Well, I’m not using that and still charting iFast PE ranges :) By charting I mean by plotting the highest and lowest PE for each year, then once you have about 5 years, you know the maximum and minimum PE and there you got a range.

Qi Jie replied 3 years ago

May I know what software are you using? Maybe I can go check it out abit :)

Jieren Zheng replied 3 years ago

I’m actually using excel ^^” Just look at yahoo finance prices for the past years, then go find the annual report, find the highest and lowest price and calculate it with the annual report. Nothing really fantastic actually ^^” (Thus I called it the lazy method)

Qi Jie replied 3 years ago

Ohh, thought you were using those fancy charts that I see around😅

Btw, thanks for all the info! I would see what Victor or Rusmin have to input.

Have a great weekend! :)

Jieren Zheng replied 3 years ago

Same to you :)

6 Answers
Qi Jie answered 3 years ago

Just to sum up for my questions:

  1. what to take note when investing in iFAST?
  2. For AUA and AUM is there any comments after reading? I supposed iFAST profit through the commission fees and platform fees for what they provide … ?
  3. Lastly,valuations method for iFAST? I think PE is one that I will be using.What are your thoughts/input for avg PE for FinTech industry?

Thank you.

Rusmin Ang answered 3 years ago

Hi Qi Jie,
 
Let me input some of my pointers below:

  1. Virtual banking license in HK, China’s venture and new broking licenses in other markets. If they can crack the first two, iFast should be able to grow really fast. For now, it is still early stage… 
  2. iFast’s revenue is mainly derived from AUA which made up the bulk of the recurring income (80%). Increasingly, they should have more non recurring income, i.e. transaction fees from their brokerage arm as this is relatively a new segment for iFast.  
  3. Yep, PE is good but you may need to exclude the losses from their China segment.
Qi Jie replied 3 years ago

How does AUA works in iFAST? What administration part they do under the asset? Since AUA explain earlier by Jieren is like a custodian of the shares by the broker. In iFAST context may I have a better understanding/explanation?

Thank you.

Rusmin Ang replied 3 years ago

Have you gone through their IPO prospectus? I can give you the answer but you would learn more over there. If you still can’t get it after reading it, then can clarify here :)

Qi Jie replied 3 years ago

I only read through the annual report and trying to figure it out, never thought of IPO prospectus.
Thanks for the advice will go read it up! :)

Rusmin Ang replied 3 years ago

It is definitely worth the read :)

Company usually discloses a lot of info, especially their business model over there!

Qi Jie replied 3 years ago

I just googled the IPO prospectus, and when I am reading company it, is there some parts I should take note of?
This is also my first time looking at a IPO prospectus 😅

Qi Jie replied 3 years ago

Reading it*

Qi Jie replied 3 years ago

Is there like a guide for reading IPO prospectus or sth like that … ?

Qi Jie replied 3 years ago

Tks alot! :)

Qi Jie answered 3 years ago

May I cfm that iFAST AUA recurring revenue is through the trailer fee, platforms fee and wrap fee? 

Rusmin Ang answered 3 years ago

You’re very close to the answer. Wrap fees are non-recurring and the other two are recurring. 
 
 

Qi Jie replied 3 years ago

Ok, tks alot Rusmin!

Rusmin Ang replied 3 years ago

Most welcome :)

Qi Jie answered 3 years ago

For the CAPEX of iFast, instead of the normal purchase of equipment and plants, do I also include the purchase of intangible assets which is below the purchase of equipment and plants? 
I am referring to 2017 annual report. I feel that is good to add them in as I think intangible assets are those license that they acquire for their business to operate.

Rusmin Ang answered 3 years ago

Yes, you can include that 

Qi Jie replied 3 years ago

And to cfm, iFast currently have no debt? Since I don’t see any in liabilities?

Also when I am reading the financials, in order to be safe, instead of excluding the China operations, I took the values that includes China operations. So is that okay? Or anything I need to take note?

Thank you

Rusmin Ang replied 3 years ago

Yep, no debt for FY2017. But recently they took on debt as they are applying for e-banking license in HK.

Yes, you could include China operation. Just bear in mind, now it is loss making as it is still early stage

Qi Jie replied 3 years ago

Ok tks alot Rusmin! Pardon me for asking too many questions!😅 Still trying to learn as much as I can along the way!😄

Cheers!

Rusmin Ang replied 3 years ago

You’re most welcome, qi jie. Happy analysing and merry xmas :)