N2N’s long-term prospects still intact
KUALA LUMPUR: N2N Connect Bhd’s (N2N) long-term prospects are still intact while the group’s near-term growth will see earnings driven by an industrywide replacement of back office systems (BOS).
AmInvestment Bank Bhd (AmInvestment Bank) believed that the long-term prospects of N2N are still intact given the group’s potential strategic collaboration with SBI Holdings (SBI).
“Recall that the two parties intend to develop a blockchainenabled platform to digitalise the trading of multiple financial instruments in one venue, including equities, derivatives, currencies, etc,” the research firm said.
In regards to N2N’s near-term growth, AmInvestment Bank expected earnings to be driven by an industry-wide replacement of BOS.
“We understand that most brokers’ BOS are 15 to 25 years old and a replacement is long overdue. The increasing complexity of trading procedures, such as the recent introduction of shortselling, requires a more advanced BOS, thereby necessitating a
Recall that the two parties intend to develop a blockchain-enabled platform to digitalise the trading of multiple financial instruments in one venue, including equities, derivatives, currencies, etc. AmInvestment Bank
system upgrade.
“N2N is currently among four bidders tendering for the work to replace BOS for brokers. There are currently 28 brokers in Malaysia, and a traditional BOS typically costs RM8 million to RM12 million.”
Overall, AmInvestment Bank continued to like N2N due to the group’s leading position in the online trading solutions space, the acquisition of AFE – which offers tremendous earnings accretion – and the affordability of TCPro Global, which could help the group win the market share from global competitors such as Bloomberg and Thomson Reuters.