iFAST (SGX: AIY) shares are up 8% today on the announcement of the latest profits numbers. Those are up 308% on a year on year basis. Which makes the share price rise look pretty meagre. But there is a reason for this - this is a financial trading profit. Those do not necessarily repeat. Getting the trading book right in one specific time period does not mean that same trading book will be right for the next or subsequent periods. Of course, people who get it right one time can be assigned a higher probability of doing well again but that’s not quite the same thing.
As to what’s done at iFAST: “iFAST Corporation Ltd. provides investment products and services in Singapore, Hong Kong, Malaysia, China, and India. It operates through Business-to-Business (B2B), Business-to-Consumer (B2C), and Business-to-Business-to-Consumer (B2B2C) divisions. The company’s B2B division operates iFAST Central that includes a range of services, including investment products, fee collection, operational support,” and so on.
The specific and new information is: “Fintech platform iFast Corporation reported a 308.4 per cent rise in net profit to $8.5 million for the three months ended Sept 30, 2023, from $2.1 million a year ago. The increase in profitability was driven by contributions from the group’s non-banking operations, which comprise iFast’s core wealth management platform business and its ePension division.”
iFAST Corp share price from Google Finance
It is possible that some of this rise will stick: “The surge in net profit was attributed to the growth in the group’s operations in Singapore and Hong Kong. Total revenue rose by 23.8% y-o-y to $66.2 million due to higher revenue and interest revenue for the three-month period.”
Brokers benefit from higher interest rates. Margins left by customers can be invested - almost always in short term government bonds - to the benefit of the brokerage, not the customers. So, brokerage shares benefit from rising interest rates.
There is therefore a mixture here for iFAST. One part was the specific trading book and the other the general improvement in the terms of business. The final value of the equity being how we wish to apportion that profit rise - repeatable or not?