iFAST’s Share Price Plunged 11% in a Week: Should Investors worried?

On 14 January, iFAST provided an update on the status of its Hong Kong ePension division because of a news report announcing that the project had fallen behind schedule due to manpower shortages.

The Hong Kong Provident Fund regulator had stated that the commencement of the Hong Kong pension platform will be delayed by eight months.

Despite this delay, the regulator was optimistic that the original target commencement date set for end-2025 could still be met.

On iFAST’s part, it had been prudent and assumed that contributions from the ePension project will only commence in the fourth quarter of 2023 (4Q2023) as it anticipated some form of delay.

The group still expects some initial contribution from this project to flow into its books in 4Q2023.

As a reminder, back in late 2021, iFAST announced the projected financial numbers from this mega-contract, with its Hong Kong division potentially contributing seven times the net profit that the segment is earning right now.

Management expects this as the eight-month delay was attributed to a “manpower shortage due to COVID-19”, we believe that it should be viewed as a temporary problem.

China and Hong Kong were adopting a strict COVID-zero policy back in 2022 with periodic lockdowns, mass testing, and draconian social restrictions.

Because of these measures, sufficient staff could not be hired for the ePension project.

The good news is that China reopened its borders on 8 January and dropped its quarantine requirements, with local authorities stripped of the power to shut down entire communities from February.

These moves are a massive pivot for the country as it finally learns to live with the virus.

It’s envisaged that with the reopening, the Hong Kong pension project should resume with sufficient manpower, thus helping to resolve some of the delays.