Earnings Call: Q4 2020

Feb 8, 2021

Good morning, everybody. Welcome to the Q4 2020 and full year 2020 results briefing. My name is Jean-Paul, from the corporate communications team, and together with me are the CEO, Mr. Lim Chung Chun, and CFO, Mr. David Yong, from iFAST Corp, who will also be presenting after me. I'll just be running through the key summary with you before David runs through section one, and Chung Chun will be running through section two, as well as the Q&A with you. I'll start with the key summary. The group reported a record quarterly net profit of SGD 6.83 million in Q4 2020. That's an increase of 127.5% compared to Q4 2019. This was achieved on the back of a 43.5% year-on-year increase in net revenue and 41.6% year-on-year increase in gross revenue. For full year results for 2020, net profit grew 122% year-on-year to SGD 21.15 million. Again, on the back of a 21.7% increase in net revenue and 35.5% year-on-year increase in gross revenue. The growth in profit was substantially higher than the growth in revenue. This shows the positive operating leverage and scalability of our group's business model. The improvement in our business shows that iFAST Corp continues to be a beneficiary of increased digital adoption in the wealth management industry. The improvements were seen across both our B2C and B2B businesses. Net inflows hit a record high of SGD 3.16 billion in 2020, which helped our group's AUA to a record high of SGD 14.45 billion as at 31st December 2020. We believe that the robust growth seen by the group this year has resulted from our past investments in building up a strong integrated digital wealth management platform. We'll continue to work hard on the various initiatives in all the existing markets that we operate in to ensure that the medium to long-term growth prospects will remain strong. The growth in the group's AUA in full year 2020 at 44.5% year-on-year, as well as the continuing positive momentum in net inflows that we've seen, will serve as tailwind for our business performance as we have entered 2021. Barring unforeseen circumstances, we expect further growth in our business performance and targets to improve our operating margin in 2021. For the final dividend for full year 2020, the directors have proposed an increase in dividend from 0.9 cent per ordinary share in full year 2019 to 1 cent per ordinary share. The proposed final dividend will be subject to approval by shareholders at our AGM which will be held on 23rd of April 2021. On the next slide, we have shared this in January, for our group's AUA numbers. It's up 44.5% year-on-year and 14.8% Q-on-Q to a record high of SGD 14.45 billion as at 31st December 2020. In terms of the net inflows, as mentioned, the group has hit a record SGD 3.16 billion in terms of net inflows for the full year 2020. In Q4 2020, the number was at SGD 847 million, substantially higher than the number in the previous quarter in 2019. Similarly, for subscription X reaching, the group hit a record high number in 2020, and the Q4 2020 number was also substantially higher compared to one year before that. I'll now invite David, our CFO, to run through the financial results in section one. Thank you. Morning, ladies and gentlemen. I am now going to present the financial results for the fourth quarter and also for full year. For the fourth quarter, our gross revenue is about 42% growth to about SGD 47.9 million. Net revenue increased by about 43.5% growth to about SGD 24.3 million. Other income is about 200% growth to SGD 1.56 million. Operating expenses increased by 23.7%, that is SGD 7.6 million. We have a small net finance cost, about SGD 60,000, and the share of loss of associates in Q4 is about SGD 0.27 million. PBT for Q4 is SGD 10.96 million, about 134.2% growth. PAT is SGD 6.77 million, about 129% growth. Net profit attributable to owners of the company is SGD 6.83 million, about 177.5% growth. EPS for Q4 is 2.51 cents, about 124% growth. We propose the final dividend per share is 1 cent per share, which is about 11% growth compared with Q4 2019. For the full year 2020 result, we achieved the gross revenue, SGD 169.93 million, about 35.5% growth. Net revenue is about SGD 85.86 million, about 32% growth. The growth of the gross revenue and net revenue is mainly due to the growth of our business, the increase in the AUA from the net inflow and market impact, and also the growth from the non-recurring net revenue from stock and processing fee and gross margin. All this contributed to the growth of the gross revenue and net revenue. Our full year other income, about SGD 5.2 million, about 155% growth. It is mostly mainly due to the government grant from Singapore government and also Hong Kong government. Our operating expenses increased by 16.5%, growth about SGD 65.29 million. We have a small net finance income, about SGD 30,000. Share of the loss of associates is about SGD 410,000 for financial year 2020. Our full year profit before tax is about SGD 25.39 million, about 129% growth. Profit after tax is about SGD 20.96 million, about 125% growth. Net profit attributable to owners of the company, SGD 21.5 million, about 122% growth. EPS for full year is 7.6 cents, close to 120% growth compared with full year, financial year 2019. Our dividend per share for the full year is about 3.3 cents per share, which is about 400% growth compared with the last year. Next slide, please. This slide just shows the five years results for our group, including the China operation. I think I will not go through. I will just highlight some figures. At the bottom, you notice our operating cash flow for financial year 2020 is about SGD 41.56 million. Next slide, please. If excluding the China business, our gross revenue is about SGD 168 million, net revenue SGD 84.1 million. Other income, SGD 5.18 million. Operating expenses, about SGD 58.44 million. Small finance income of about SGD 90,000. No change for share of profit or loss associated. Our PBT excluding China will be about SGD 30.45 million. PAT, excluding China, will be about SGD 26 million. EPS, excluding China, about 9.6 cents. The operating cash flow is about SGD 45.1 million excluding China. Next slide, please. This chart that we saw, we saw the PBT margin for the group based on the net revenue. The left-hand side is including China operation. Notice that in financial year 2020, our PBT margin for the group including China increased to about 9.6%. On the right-hand side, excluding China operation, our PBT margin is about 36.2%. Next slide, please. This slide shows some financial indicators. EBITDA is about SGD 32.98 million for year 2000. Net cash position about SGD 53.26 million. We have operating cash flow of about SGD 401.56 million. Including China and excluding China, our operating cash flow is about SGD 45.1 million. Our CapEx for 2020 is about SGD 12.63 million. Current asset is SGD 38.35 million, and our shareholders' equity as at end of financial year 2020, about SGD 104 million. Next slide. This slide just shows the further breakdown of the net cash position that I mentioned earlier. Our cash and cash equivalent as at end of December 2020 is about SGD 36.44 million, and others investment include the investment in financial assets that are under current assets, about SGD 60.84 million. All together, the total cash and other investment is about SGD 53.28 million. We have fully repaid the bank loan during the year 2020. We have the net cash position remain the same as SGD 53.28 million, and the gross debt to equity ratio is 0%, and we are in the net cash position. Next slide. This chart will show the group operating cash flow for the last financial year. As mentioned earlier, operating cash flow excluding China is SGD 45.1 million, including China is SGD 41.56 million. Next slide. CapEx, we spent about SGD 12.63 million for the financial year 2020. Number of issued shares at end of December 2020 is about 272.3 million. This is our consolidated financial position, the group balance sheet. Our total non-current asset is about SGD 59.67 million, mainly considering the plant and equipment and intangible assets, goodwill, and also the right-of-use asset, which is actually mainly the tenancy agreement for the office. Our current asset is about SGD 194.6 million, mainly due to the uncompleted contract buyers at the end of the year, which is about SGD 94 million, and also our cash and bank in hand, money market fund, and also other investment. Our client trust account as at end of 2020 is about close to SGD 940 million. Next slide. Our shareholders' equity, I mentioned earlier, is about SGD 104 million. Non-current liabilities, mainly due to this liability for the office, is about SGD 12 million. All together, total non-current liability is about SGD 14.6 million. Total current liability is about SGD 136 million. Mainly it is due to the uncompleted contract sellers at the end of the year, about SGD 94 million. As mentioned earlier, we have fully repaid the bank loan. The balance is nil for the bank loan as at end of 2020. Total liability is about SGD 150.87 million. Next slide. Lastly, will be the proposed final dividend for financial year 2020. We propose the final dividend is one cent per ordinary shares. Its dividend date is 3rd May 2021. Record date and time will be 4th May 2021. The payment date will be on 30 May 2021. Just to highlight, this will be subject to the approval by the shareholders in the coming AGM on 23rd of April 2021. That is all from me. Thank you. Thanks, David. Now I will move on to the section 2, based on the performance trends. This slide here, slide 23, shows the breakdown of AUA by markets. As you can see, Singapore continues to be the key contributor for the group. In fact, the percentage contributed by Singapore actually increased a little during the year, showing the very strong performance in Singapore business that you have seen during the year. In terms of the breakdown by products, you note that unit trust continued to be the key asset class for us. So 75% of the AUA at the end of year 2000 continued to be accounted for by unit trust. The other number to take note would be the cash portion. I think the cash and unit trust will actually contribute to the highest level of recurring income. Having a good percentage from this portion will actually be very healthy from the perspective of recurring income. Next. This chart here, as usual, shows the trend of net revenue since 2004. For last year, we continued to grow. In fact, the growth rate was stronger than what we have seen for quite a number of years. So last year was actually a year where our overall growth accelerated. The red bar shows the non-recurring income, and the blue shows the recurring income. Both components grew, even though the non-recurring income grew at a stronger pace. But the recurring contribution from net recurring income is around 70%, which is still at a very healthy ratio. Next. This chart shows the net revenue as a ratio of average AUA. As I noted, the contribution from non-recurring income increased during the year, but the contribution by net recurring income is still very healthy at about 70% of the overall net revenue. You actually find that during the year, the total net revenue as a proportion of overall AUA actually improved compared to the previous year. Okay. The following few slides are the actual numbers showing the trends over the last 5 years. I would not riff through in detail. I think those are self-explanatory. Next. This one is on the net revenue. Singapore continued to be the key contributor. We saw growth in every market, and the biggest market, Singapore, actually saw a very strong growth. B2B segment, and the next slide will be on B2C segment in terms of the breakdown of net revenue. Next. P&L by geographical segment, you notice that the biggest contributor was actually Singapore. In fact, that actually had the highest growth in terms of profitability for us. So I think it is good that our core market continues to be at a stage where we are able to continue to generate a lot of growth. Next. Yeah, this is the P&L again. This chart shows the chart that we have been showing for quite a number of quarters already. The overall bond business that we have in the three markets, Singapore, Hong Kong, and Malaysia, that has continued to grow. This particular chart shows how the Singapore business has actually grown. So you will find that starting first quarter of last year, it has actually accelerated, and that continued to actually accelerate for us for both B2B and B2C segments. Yeah, so a quick summary on each of the key markets. Singapore, as I mentioned, that continues to be not just the biggest market but actually a market whereby we have been able to see very strong growth. Net revenue for Singapore for the year grew by 34%, but fourth quarter, you actually found that the growth was in fact very strong at 50% compared to. Yeah, it's a 50% year-to-year growth for fourth quarter of 2020. In Singapore, historically, we have talked about the B2B and B2C division. I think this particular quarter, we actually give a bit of detail on a division that we call the iFAST Global Markets division, IGM. That's actually our in-house advisory arm that we started a few years back. That has actually been showing very good progress, particularly in the last year, and is now currently a significant contributor to the overall growth. B2B, the IGM, as well as B2C, have actually done quite strongly during the year. Next. Hong Kong grew during the year, but it didn't grow as strongly as Singapore and Malaysia. The B2C business of Hong Kong was actually quite strong, in line with our B2C business in the other markets. B2B, however, was a bit slower, and I think the other factor that, in a sense, reduced the overall growth in net revenue for Hong Kong was the net interest income that we get from our Hong Kong business. As you know, interest rates have been declining in the past one year, so that accordingly has affected the net interest income that we get for the Hong Kong segment. That actually reduced the overall growth rate. Of course, in Singapore, we also saw lower net interest margin from the cash portion, but because the proportion of increase in the cash is very strong, that actually meant that we had continued to grow our net interest income. But Hong Kong, the impact of a negative declining interest rate was actually more obvious. The overall growth rate on net revenue then wasn't as strong. I would just like to have a quick word about the eMPF project that we mentioned previously. I think in a recent press release, we gave a bit of update on this particular project. I think MPFA in Hong Kong has actually announced that they have awarded a contract to PCCW, and because I think the market is aware that we have a partner with PCCW in the bid for a contract, that's why we thought that we had to give an update at the end of our 30th January. At this point in time, however, we're not able to give too much detail as yet because we're still at a stage where certain details are still pending finalization, and so on. I would just like to comment that if you can refer to some publicly available information that's been released by eMPF in terms of the nature of the contract, particularly the party of the contract, then you actually understand that our role would be seen more from 2023 onwards in terms of contribution for quite a number of years. At this point, I would just say that it will be a very material impact when the whole thing is finalized. At this stage, I'm not able to give further comment, and we hope to do so at some time in the future. Malaysia had a good year as well. I think Malaysia has been at a stage where the growth momentum for us has been quite strong. I think we've seen quite similar growth in Malaysia as compared to Singapore. The B2B, B2C and iGM divisions have all grown quite strongly. In addition, in Malaysia, we actually have a significant contribution from IT services under the Fintech Solutions division, where we actually get some income from providing IT services to other financial institutions and to EPF, and so on. So that market continues to be an interesting one, and we expect to be able to continue to grow. We announced some months back that we've been awarded a stockbroking license in Singapore. We're currently preparing. We expect to be launching that business in the next few months. China is a market where in the initial years, the growth rate wasn't that good. I think particularly 2019 was actually a tough year for us. I would say that at the initial period, some of the services and so on perhaps were not fully in place. Also the China market several years back was dominated quite a bit by a lot of the implicit guarantee product, et cetera, which we don't do, and that affected the overall ability for us to ramp up the volume on the mutual funds on our platform. But I think the past one year, we actually find that the momentum have gathered steam. We feel that we are starting to see clearer signs that the business for us in China will be able to continue to grow at a robust pace. I would add, however, that I think in the current year, we expect that the growth in revenue can be quite significant. But in terms of profitability, perhaps, we may not really be seeing the improvement as yet because we are at a phase whereby we feel that what's more important for us is to be able to ensure that the overall size of our China business is sizable, and we are able to continue to We want to be able to continue to invest and make sure that the growth momentum can continue. While profitability may not really be improving in the current year, we think that we'll start to see that benefit looking forward into 2022 and beyond. But I think at the current situation for our group, we actually find that the overall profit that we have from Singapore, Hong Kong, and Malaysia are quite sizable already compared to the losses that we are currently seeing in China. So we're actually quite comfortable with the additional investment that we need to make in China, and that should not stop the group from being able to show a healthy growth as we move on. Next. India, unfortunately, did not see a good year. I think the AUA was very much flat and then we were still making some losses, but it's an associate company, so the overall net loss contribution for the group isn't that substantial. We continue to believe that going forward it will be a market that will be able to grow well and be interesting for us. We're at a phase where we continue to invest in the business to make sure that in time to come it will be interesting. Those are the key updates on the different markets. I'd like to end off by saying that in our outlook statement for the year, the board indicated that we expect that we should continue to grow in 2021 compared to 2020. I think the 42% growth in AUA that we saw last year will actually act as a tailwind for us in terms of the overall prospects for the current year. It's also encouraging to find that the net inflow for us, in terms of the client assets, has actually been pretty strong. Third quarter and fourth quarter particularly have actually been quite robust for us, and we have reason to think that this year will be quite healthy. That's the presentation from us, and I'll stop there. We'll move on to take some questions that are coming in. Now we'll be entering the Q&A session. If you have any questions, you can use the Q&A function to type down your question and let us know. For those, you can also use your audio format to give us your question. What you can do is actually to click on the Raise Hand button to let us know that you have a question, and we'll ask you to unmute yourself to ask the question. For those who are asking questions using audio, you can also let us know your name and also the organization that you are representing. Prior to our presentation, without intervene, we actually received a few questions from Royston Yang from The Smart Investor. Royston is a senior analyst at The Smart Investor, and he has a few questions for our management team. The first question is that, "iFAST recently announced that it has clinched the eMPF contract as a contractor for PCCW. May we find out the terms of the contract, how will it be structured, and the financial implications for the group? Yeah. For eMPF, as I mentioned, at this point in time, we are unable to give the details on the terms of contract. We look to do so sometime. We will look to give guidance in terms of how our overall group can grow sometime in the future. At this point, I cannot comment too much except that, as I mentioned, if you refer to the publicly available information on the tender, you actually note that Part C of the contract would stretch mainly from 2023 onwards for a period of at least seven years. That is the key role that iFAST will be playing. It will be a material impact for us going forward. We can only give more details in the future. The second question from Royston is, "What is the timeline like for iFAST to commence share trading for Malaysian stock? As I mentioned earlier, we expect to launch the business in the next few months in Malaysia. The next question from Royston as well, "The progress has been test for the private fund management license in China. What is the current AUA for China and what is the projected growth for this AUA? Will investors see a break-even point achieved soon? Regarding the private fund management license, I think that in previous months earlier, we have actually made an announcement regarding that. We are now preparing to actually launch this business. Current AUA for China, I think that has been provided in the slides. I think we are talking about 1.39 billion RMB as at the end of last year. That was a healthy growth during the year of 170%. Will investors see a break-even point soon? As I mentioned earlier, for this current year, while we expect that there will be good growth in revenue and AUA, but in terms of bottom line, we probably won't see much improvement. The reason is because we are at a phase whereby we believe it is more important to continue to invest to make sure that we are able to have a very good growth rate in China. We look at the level of losses that we are making for China, and we look at the overall group profitability that we have, and we feel quite comfortable about the size of the losses that we expect to make for the current year. I think the benefit of the improving bottom line could likely be felt from 2022 onwards. The current year, we are focusing on ensuring that AUA and revenue are able to grow. The next question from Austin is whether iFAST is bidding for other contracts that is similar to the one that is pitched for the eMPF? I think I will have to say no, because I think the eMPF project is one of a kind. It doesn't come about every other year. Certainly nothing of that kind of size and quantum. Another question is that does iFAST have any plan to bid for the upcoming Malaysian digital bank license that should be released this year? For the Malaysian digital bank license, we have been studying that. We expect that we will be bidding for it as well. We will be submitting an application for this as well. I think further details can only be provided in the quarter results. The last question from Austin, which is a similar question that is being asked by Sharon from Jefferies, is that, can we also share about the AUA trend for iFAST? The AUA has been growing quite rapidly as at the 31st of December, 44.5% year-on-year. So what is the projected long-term percentage growth in AUA, and will the 2028 target of 100 billion be achievable? Yeah. I think we mentioned about the target of 100 billion in 2018. At that time, in order to achieve that number, we were looking at a projected growth rate of 28% per annum in terms of the AUA. But I think for the first one or two years, we were growing at somewhat below the 28%, but last year, things accelerated. I would say it accelerated for a couple of reasons. One, of course, the increased pace of adoption of digitalization has actually helped. I suppose what is also important to note is the fact that we have been working hard in the last five years, six years to ensure that we have integrated a wealth management platform that can handle all the different products. So I think last year we start to see the benefit of that a lot more clearly, hence the growth rate accelerated. From where we are, we look at the target of SGD 100 billion in 2028. The way the opportunities are lining up in the whole industry, we feel that there's a decent chance for us to be able to reach SGD 100 billion by 2028. I think it's worthwhile noting that SGD 100 billion is in itself not a big number. I think if you look at some of the U.S. players, a platform like Charles Schwab, for instance, I think you're looking at something like $4 trillion U.S. in terms of AUA, and that comes mainly from the U.S. So for us, we're talking about us being present in Asia, in five markets. To actually be able to, at some point, get to SGD 100 billion or by 2028 get SGD 100 billion, I don't think it sounds too far-fetched if you look at the size of the market potentially for this business based on the lessons that we're seeing from other more different markets. Yeah. We have a question from Paul Chew from Phillip Securities Research. He's asking what's the longer term aspiration in China, and what are the operating milestones to achieve this? Yeah. I think for our business in China, as well as in all the five markets we're in, we are essentially an investment platform. Similarly, in China, that's a business investment platform as well. The main difference is that for China, we don't have our FSM or financial supermarket channel directly. We have our B2B business, and we call it the iGM business, which is our in-house advisory division. That is the business that we actually do. We believe that there's a very substantial opportunity for this B2B opportunity in China. That is essentially the goal that we have set out and that continue to be the same. Next, we have a question from Lee Keng from DBS. She is asking whether there is any guidance on OpEx. Yeah. At this point in time, we are not immediately giving any guidance on OpEx. What I would like to say is that we are targeting to be able to grow our net revenue at a faster pace than the pace at which we grew the operating expenses. That is in line with our planning, in terms of targeting to improve our operating margin, as mentioned our results announcement. Next, we have two similar questions. One is from Paul Chew, and another one is from Yu Xian from Tokuburin. They are asking a question related to the eMPF, whether it is starting from 2023, and what is the project type revenue, or whether it is recurring. For Yu Xian, he is asking whether the platform is only partly operational or from 2025 that it is fully operational. As I noted, if you look at the information that has been provided by MPFA, you should arrive at a conclusion that the revenue that we get should be recurrent and should start from 2023 onwards. Next, we have a few questions from Andrea from CGS-CIMB. The first question from her is that she understands that there will be tailwind from 2020 growth going into 2021. Which segment or region do we expect to be the key growth driver for the business? And do we see trading volumes in 2020 persisting over 2021? Yeah. We are certainly targeting and hoping for quite a broad-based account growth. We think that Singapore will continue to be able to see good momentum based on the strong net inflow that we have actually been seeing. The growth that we're seeing comes not just from the trading volume on the stockbroking side, but it also comes from the unit trust side. I think you know that our overall unit trust AUA for the group and for Singapore has actually continued to grow. And that will allow us to grow not just the non-recurring income, but the recurring income as well. It is a common, understandable concern about whether we are able to sustain some of the trading income. I would say that in our case, unlike many other stockbroking firms, we actually firstly build up the overall recurring income quite well. Secondly, even from the stockbroking side of the business, the overall model that we adopt is actually such that we see the net inflow into overall business. And because the AUA are part of our overall AUA, then clients are likely to continue to see us, and we start from a small base. So we think that we still have a very good room for growth. For other countries, as I mentioned earlier, we expect that there's still very good opportunity from Malaysia, Hong Kong, and China. So we are targeting for quite a broad-based account growth for this particular year. The second question from Andrea has already been answered, so we skip that. The third question from Andrea is that, is there any more JSS to be expected this year, noted that there was 3 million received into 2020? We expect to have one final contribution in the first quarter of 2021. We have a raised hand question from Krishna from Jefferies Singapore. Hi, Krishna. You can unmute yourself to ask your question. Yeah. Hi. Are you able to hear me? Yes. Yes. Yes. Hi. Thank you very much. Just a few questions, just on some of them have been asked, but I just wanted to ask something more. You are not giving your OpEx guide you had given last year, and I understand those reasons, but you are also saying that you want to grow your net revenue faster than the OpEx. Will you hesitate a guess or rather a guidance on your margins? Say, either PBT margins or OpEx margins? That is the first question. Second question is, will you give a CapEx guide for 2021? That is my first question. I have a few more in the pipeline. Yeah. Firstly, regarding the OpEx guidance for 2021, at this point in time, we are not pinning down the exact number as yet. I suppose, the reason for that really is that we do not want to. I think we are operating in an environment whereby along the way there is some opportunity that emerges, and as we prepare for some of the newer project and so on, there will be some preparatory work that we actually need to do. What we intended to do is to be able to balance our overall ability to capture growth opportunity and our overall ability to grow the bottom line and the operating margin. We actually find that, typically when the overall revenue growth is strong, then we are in a better position to be able to take on some additional investment during the year. To try to give OpEx guidance very quickly, during the year may not be the best idea at this point. I know that for last year, we actually did provide the OpEx guidance. The reason why I did that for last year was because, prior to last year, we actually went through a couple of years whereby we were actually growing revenue quite well. But the profitability growth was more patchy. At the end of 2019, early 2020, we basically wanted to assure investors that our business is scalable. We do need to continue to increase the OpEx at a huge percentage. I wanted to give the assurance to investors that we can grow our profitability quite well for 2020. That is the reason why we give the guidance. For this year, of course, we expect we continue to have the benefit of a business model that is scalable. That is why we made a statement that we are targeting to improve the operating margin. But at this juncture during the early part of the year, we are not immediately giving an actual number as yet. Okay. Anything on the CapEx guidance? You had about SGD 12.6 million this year. Anything, how much you? The CapEx guidance, we will be giving the guidance in the next one or two quarters as we firm up some of the other project, including a project for eMPF and so on. We are not immediately pinning it down. Okay. Thank you very much. I have a couple of more questions, and one is a bit of a tactical. The Singapore, Hong Kong business that you said about, those color that you gave about the net interest income, that is very useful. Do you think that the net interest income trajectory for Singapore and Hong Kong will follow similar pattern as what you had in 2020? Basically, you see more cash balances in Singapore, and less so in Hong Kong, and your interest rates are relatively flat for 2021. Will that be fair to say? We hope to be able to grow our net interest income in Hong Kong in 2021. In a sense, for Hong Kong in 2020, we were coming from a situation where the net interest income margin was higher than perhaps what would be sustainable. When the interest rate declined the way it did, especially for US dollar and Hong Kong dollar, then the effect was felt. But from where we are today as we grow the overall AUA, we hope to be able to grow the net interest income for Hong Kong and certainly for Singapore also. Okay. Hello? Hello. Yeah. I have one more question. This is a bit more of a long term. You are focusing a bit more on this advisory business. You have given a bit more color on that. The question is that, doesn't it compete with the advisors who use your platform, and say, more specifically, out of your 800 employees, how many employees are there in that iGM business? Hmm. Evans? When we started our B2B business, I think in 2003, we took the decision not to have our own in-house advisors. The main reason was because we wanted to avoid any conflict with the B2B customers and partners that we actually had. So that position was a position that we took for many years until about four years ago. Four years ago, we decided that we should have this in-house advisory division that we call iGM. Certainly at that point in time, when we made that decision, I think that some of the B2B partners that we have were a bit concerned, and some were not too happy about it. We felt that it was important for us to make this move, mainly because I think if you take markets like Singapore, even some of the markets like Hong Kong, a lot of the focus of the advisors tended to be on insurance. In our case, we believe in the overall wealth management model that focuses on the advisors advising on the simple investment product, unit trusts, ETF, even bonds and stocks, as opposed to a business that tends to focus on the high upfront commission. In order to actually, in a sense, demonstrate to the overall industry that this model worked, we decided that we should have this in-house division. As I mentioned, we started this in Singapore about four years ago, and in the first one, two years, it was not a big number, but I think in the past one year especially, it's become quite sizable. In our case, I would say that because of the focus of the advisors on the investment product and on the wrap account, one effect of this business is that the average AUA per rep, per individual advisor is actually quite high for us. For instance, we only have about 40 advisory reps in Singapore because we didn't want to rush and have a big number. But that 40 actually brings about quite a sizable AUA for us. The AUA for advisory rep is actually one of the highest in the financial advisory industry. It also allows us to showcase the business model of being able to advise on the different areas of simple investment product, including ETF especially, which haven't taken off that well in Singapore. I think so far that has been encouraging, and that is showing that this model is actually working. Our partners, of course, initially they were somewhat concerned, but I would say that by now, most of them actually are quite comfortable with our division, and that is not an issue at this point. In terms of employees that we have, I would say that we have salary employees will be over 700 people in the five markets, including India. In terms of the advisors under the iGM side, there are probably about 200 currently. Okay. I think those are very clear. Thank you very much, and best wishes for the upcoming years. Thank you. We have another question from Paul Chew. He is asking about the recurring net revenue versus AUA, which looks a bit lower from prior years, and to see what is the drop, and will this be the future ratio? I think the key reason for the drop is probably that our AUA currently also includes stocks AUA. Stocks AUA has grown quite significantly in the last one, two years. The stocks AUA does not directly contribute the recurring income. I would say that it indirectly contributes a recurring income because we operate on a pre-funded model, so before investors buy the stocks, they have to put the money in a cash account or in our, we call it Auto-Sweep Account. That part brings about the recurring income. Because the ratio is calculated using the net revenue over total AUA, then you actually find that your net revenue as a proportion of total AUA has gone down. Because stocks actually contribute quite a significant non-recurring income, the overall net revenue over overall AUA percentage has actually improved during the year. Next, we have a question regarding the eMPF contract from Andrea. They understand the details of the eMPF contract are still being finalized. There is a public funding of 2.4 billion Hong Kong dollars of development costs for the project. Could we get a sense of how this development cost will be spread over the project and how this could affect iFAST's bottom line? What I can say is that the development cost, the development will be done mainly by our partner, and we are not directly the one doing the development, so we do not expect to see much benefit from the development side. Yeah, I think that is what I can comment at this point. Yeah. Next question from Paul Chew. The growth in AUA in unit trust, what type of funding boosts traction? For digital adoption and wealth management, does that mean DIY of wealth product or your product or just B2B? Growth in AUA, what type of funds? I would say that it is quite a broad range of funds. Firstly, of course, equity fund is still the majority of that. So the majority of our unit trust AUA will actually be equity fund, and that will include the equity funds in the different market, be it Asian market, China market, U.S. market, et cetera. It also includes some sectoral fund, perhaps. Yeah, so it is quite a broad-based account fund. It also includes some money market fund because some are parking facility and so on. Of course, overall, one fund-based account fund. So pretty much spread out. Digital adoption in wealth, does that mean more DIY of wealth product and platform or just B2B? I would say that it refers to both. DIY certainly is a sizable part of it, but I think the B2B is also the part that has been quite important. We actually found during the circuit breaker last year, for instance, that iFAST perhaps was most ready as a platform in helping the various FA firm, financial advisory firm, with the unit trust transaction. That has been one key reason why we actually have done well last year as well. Digital adoption, not just by an investor, not just a DIY client, but the advisors themselves as well, because a lot more of the processes are both online, become digital and a platform that's most ready to handle that will accordingly benefit. We have a question from Ling Lee Keng. Any guidance on dividend payout ratio? DPS for FY2020 is slightly higher, yet your core earnings payout ratio is only 42% versus other year and of at least 60% ex-China funds. We are not immediately pinning down a number as yet for this current year. But we did increase the dividend for the last two quarter, and our current thinking is that, we will see some gradual increase in dividend for this current year as well. But we are not, on a regular basis, pinning down the percentage payout ratio. I know that in our earlier years, we give a guidance of 60% payout ratio. But I think in the last one to two years, we sort of stopped giving that more definite percentage. That's also partly because we feel that we shouldn't bind ourself so much at a time where there are quite a few opportunities for us to explore. One of it, of course, was digital banking. Unfortunately, we didn't get it in Singapore. That broad thinking in terms of looking at some opportunity, including even digital banking opportunity in other digital jurisdiction, is still there. We want to balance between being able to grow the dividend and ensuring that we have enough retain the next four, five years. What are your thoughts on the possibility of scrappage of trailer fee? I suppose, for this particular question, for the benefit of investors who are not aware of some of these trends in some other markets, like in U.K., for instance. I usually find that certain countries, in different parts of the world, such as the U.K., Australia, they have actually gone on to ban commission, and trailer fee is considered a form of commission for mutual funds or unit trust. When they ban commission, what they essentially mean is that the advisors cannot take the payment from product provider. They cannot take the payment from the end client. That is essentially what the ruling is. Trailer fee is a fee that is paid by fund manager to the distributor. That would then be considered a commission. Countries that have actually gone down on this path, I think there are some interesting lessons that we can actually draw from that. The first lesson really is that, when you ban commission, the fact is advisors still need to earn. If advisors need to earn, if they cannot collect the earnings from the product provider, meaning the fund manager, then they will collect the earnings from the end client. The result that we have seen in countries like U.K. and Australia is that a banning of commission actually lead to a faster adoption of investment platform as a way of doing their business, as a way of doing their business in the advisory channel. Platforms are actually among the key beneficiaries of this change. What are my thoughts of the potential scrapping of trailer fee? My thinking at this point is that, it is not likely in the next few years. But I would say that we actually do not mind if the regulator actually move in this direction. In fact, we think that, on an overall basis, we can actually benefit. Mainly because the platforms generally start to grow a lot faster in an environment whereby commissions are being banned because a lot of advisors would actually move away from focusing on high commission upfront products such as insurance, and they focus on simpler products such as mutual fund and ETF. Essentially then what it means is the platform will then have to introduce the platform fee or increase the platform fee, because the whole industry will actually have to do that. If that actually happen, we think that it can have a net positive effect for us. But on the short term, next few years, we think that it is not likely to happen in the key markets we operate in. Will participation in the eMPF project be more fee-based contractual partner or as an equity partner with PCCW? It will be a fee-based contractual partner. It is not a joint venture. As I mentioned in the press release on January 30, we thought about ourselves being a subcontractor, so it is actually in the form of a fee on an annual basis. Anybody else has any more questions? If there is no more question, then we can end the session. Thank you everyone for attending the results briefing.