By viewing material on this website you agree to the following Terms. Use of Sakura Research materials is at your own risk. THIS RESEARCH EXPRESSES SOLELY OUR OPINIONS.
Having accepted our terms and conditions, feel free to view and read our full research here.
We are short iFast Corporation Ltd [SGX:AIY].
[Updated] Accounting Questions for iFAST Corporation Ltd (SGX:AIY)
a) Digital banks have often been unprofitable, requiring frequent and substantial capital infusions even with world-class technology teams. For instance, Sea-owned MariBank experienced widened losses in 2023, while GXS Bank (founded in 2022 and backed by Singtel and Grab Holdings) aims for profitability by 2027.
While the Group targets iGB to breakeven & have a profitable quarter in Q4 2024, how do you even plan to operate profitably in 2025, 2026 and after, with iGB not even extending traditional consumer and/or business loans?
What is your current net interest margin (NIM) for the banking operations?
When do you expect the bank’s return rate on invested capital to exceed your inaugural $100m bond’s rate of 4.3%?
b) iGB UK Bank’s net assets at the end of 2023 (i.e., equity) stood at £39.481 million. In July 2024, the Group paid £14.99 million pounds cash to increase its effective equity stake by 1.78% (from 91.29% to 93.07%) in the iGB-holding company (Eagles Peak Holdings Ltd, Co # 13045848).
On this investment, could you clarify the pre-money and post-money valuation of Eagles Peak Holdings Ltd?
What are the current roles of minority shareholder (Mr. Mandeep Ahluwalia, Syndeo Capital Limited, Company # 09982425) at Eagles Peak Holdings Ltd?
For future cash infusions to iGB bank, will the cash/funds come exclusively from the Group?
c) The Group aims to grow its “AUA” to $100 billion “by 2028-2030”.
When and why did the Management decide to present the UK Bank customer deposits under the Core wealth platform’s AUA figure?
How will this affect the operating profitability % per AUA?
Customer deposits, by nature, can be removed from the UK bank at a moment’s notice. What makes the Group think that the UK bank customer deposits should be treated as Assets Under Administration (AUA) to create recurring revenues?
d) Since the Group’s founding, Singapore is and has been the largest country, accounting for approximately 72% of the Group’s AUA. Yet, Hong Kong, with approximately 12% of the Group’s AUA, overtook Singapore in earnings and revenue contribution to the Group for H1 2024.
“The ePension division in Hong Kong will be an important growth driver for the Group for 2024 and 2025. The company also expects the UK Bank to become an important growth driver in 2025 and beyond.“
Hong Kong Profit Guidance, Profit Before Tax 2025 was HKD $500 million.
Can the Group provide any estimate or range of Revenues and/or Profit-before-tax for Hong Kong market for 2026, vs. 2025?
Has the Group signed any IT maintenance contract with ePension’s contractor, PCCW Limited, for after 2025?
e) The Group auditors have previously flagged revenue recognition policies as Key Audit Matter, related to both the platform AUA accrued revenues and IT solution accrued revenues. The calculation of accrued revenues related to both IT solutions & in-house AUA report involves judgement and is an area of potential fraud risk.
Revenues for any given year are inclusive of accrued revenue where services have been rendered but the customers have not been billed (invoiced).
What is the dollar value of Unbilled Uncompleted Contract Receivables for 2023, Q1 2024, and Q2 2024?
What is the dollar value of Unbilled Trade and other Receivables for 2023, Q1 2024, and Q2 2024?
f) We note that as of 31 July 2024, “trade and other receivables” amounted to $201 million, a significant ≈48% increase from the earlier 6 months (31 Dec 2023), where the Group recorded “trade and other receivables” of $136 million.
(1) Please provide a breakdown of these “trade and other receivables.”
(2) Please provide the aging schedule of these “trade and other receivables” totalling $201 million, broken down into bands of 3 months.
(3) Elaborate on the credit terms and policies for these trade and other receivables, as well as any trends in credit impairment.
g) Grand total receivables (including both Trade receivables & Uncompleted Contract Receivables) have grown to $194m on 31-Dec-2023, and just the Trade receivables only have grown to 201,695,000 in Q2, 2024 vs. $136m on on 31-Dec-2023.
What are the distributions as per below counterparties for the Trade Receivables?
Group Distributors: %
Retail customers: %
Amounts due from related parties & associate company: %
Others: %
Similarly, what are the % distributions as per counterparties for Uncompleted Contract Receivables?
h) Equity-settled operating expenses (for both staff compensation and external advisor payments) have increased more than 8 times in 3 years, from $3.27m in 2020 to $12m in 2023.
Who and which company control these shares and options for staff & advisers during the vesting period?
Is it Crouzet Limited or Caerulean Limited, both incorporated in the British Virgin Islands?
What’s the average vesting period and other key issuance policies?
Who is auditing and controlling against misuse and misreporting of these shares?
i) In our opinion, the Group’s cash flow issues seem evident in the rising trade payables. Our calculated Days Payable Outstanding (DPO) has been increasing steadily to record highs, nearly doubling from 2021 to 2023. If the Group’s financials are accurate, it now takes around 8 months on average to pay its suppliers.
DPO days: 2023: 254 days, 2022: 208 days, 2021: 134 days
Who are the top 10 suppliers of the Group?
How are suppliers reacting to the delayed payment terms, and what impact is this having on supplier relationships, terms of trade, and the Group’s operating profitability?
By viewing material on this website you agree to the following Terms. Use of Sakura Research materials is at your own risk.
THIS RESEARCH EXPRESSES SOLELY OUR OPINIONS.
Opinions only.
SakuraResearch.com
medium.com/@SakuraResearch
info {at} SakuraResearch {dot} com
