iFAST upgraded to Add by CGS-CIMB on eMFP contract

Hong Kong currency notesHong Kong currency notes

CGS-CIMB upgraded wealth-management platform iFAST to Add from Hold and increased its target price to S$12.50 from S$8.31 to factor in the company finalising its prime subcontractor contract for Hong Kong’s eMPF project.

iFAST said Saturday it has finalised the contract for its participation in a Hong Kong pension project. While the transaction isn’t expected to have a material earnings impact this year, it will “have a very material financial impact for the years 2023/2024 and beyond,” iFAST said in a filing to SGX.

In January, iFAST announced it participated in PCCW Solutions’ successful tender for the eMPF Platform project, with the Singapore-listed company the prime subcontractor for “category C,” which includes Mandatory Provident Fund (MPF) scheme operation services, transformation services and user-delivery services.

The eMPF platform is intended to standardise and automate MPF scheme administration in a move to lower fees and create a largely paperless system.

CGS-CIMB said it estimated additional annual net profit for iFAST of around S$10 million from the maintenance project for around seven years from fiscal 2023, with further upside if the project is extended by around one to three years.

Because specific details of the contract haven’t yet been released, CGS-CIMB said it based its earnings projection on Bloomberg data indicating fees could be around 20-35 basis points of total MPF assets.

The core net profit forecast for fiscal 2023 is now S$58.2 million, up from S$48.2 billion previously, CGS-CIMB said in a note Monday.

Shares of iFAST were down 1.42 percent at S$8.35 at 4:15 p.m. SGT.

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