Fund distributor iFast looked to have hit a number of blips with the most recent pullout of live quote access by OCBC from its institutional trading platform.
OCBC's suspension of its trading link with iFast has thrown a spanner into iFast's plan to introduce its FSMOne platform in Singapore. FSMOne has been touted as a multi-product investment platform offering unit trusts, insurance, bonds, shares and ETFs on a single account.
Aside to offering clients a comprehensive range of investment products, the platform would also offer commissions that are lower than those of many traditional brokers. With no more real-time quotes, this means that the platform will now be unable to execute trades in the Singapore market.
The group is currently waiting for its application to become an SGX trading member to be approved before it can support share trading for the Singapore market. A decision on the application is expected to be made in 2017.
Meanwhile, the platform will continue to offer trading of Hong Kong shares as well as the distribution of unit trusts free of any sales charge, with additional rebates of between 30-40% of commissions. It will also offer accredited investors exposure to bonds for as little as $5,000, much lower than the typical $250,000 minimum offered by banks.
iFast has also had to contend with rising costs that has pressured its 3Q16 earnings, which fell 35.3% to $1.9m despite having stable revenue of $21m (+2.3%). This was largely due to start-up costs in China.
Over the longer term, iFast continues to see huge potential in China as it tries to grab market share by appealing to investors looking to both onshore and offshore investments in Hong Kong and Singapore.
The counter is currently not cheap, trading at 39.1x forward P/E. While lower than the peak attained in Aug (45.4x), the valuation is still at a substantial premium of more than 1sd above its mean of 29.4x.
There are 2 Buy and 1 Hold street ratings on the stock with consensus TP of $1.12.