N2N CONNECT BHD

By AmInvestment Bank Research Buy (maintained) Fair value: RM1.50

FOLLOWING the announcement of N2N’s proposed private placement, AmInvestment Bank Research has revised the earnings per share (EPS) forecast for FY18-20 by 1% to 2% as the corporate exercise will dilute the EPS.

However, the research house opines that significant developments from a potential strategic alliance are likely to follow moving forward, which have not been factored in pending further clarity on the financial impact.

The Ace Market-listed N2N is involved in the supply of e-commerce securities trading solutions to local stock broking firms and banks.

The group has recently proposed to place out approximately 52 million new ordinary shares or 10% of total issued shares to SBI Holdings at RM1.25 per share.

The exercise is expected to raise net proceeds of about RM65mil, which would be utilised entirely for business expansions within two years.

The proposed exercise is motivated by the intention of forming strategic business alliances between N2N and SBI. The collaboration is aimed at expanding N2N’s regional footprint and expedite the set-up of an “Asia trading hub”.

In addition, the collaboration allows N2N to tap into SBI’s large network of brokers and its headway in the financial technology such as blockchain.

SBI operates multiple businesses including banking services, insurance and securities brokerage. In addition, its

asset management arm invests in information technology, biotechnology and other finance-related businesses.

“We continue to like N2N due to its leading position in the online trading solutions space and its acquisition of Hong Kong-based AFE Solutions Ltd, which offers tremendous earnings accretion.

“Apart from that, we like the company because of the affordability of N2N’s integrated financial trading platform TCPro Global, which could help the group win the market share from global competitors such as Bloomberg and Thomson Reuters,” stated AmInvestment Bank Research in a note.

The research house has maintained its “buy” call on the stock, but lowered the fair value slightly to RM1.50 per share from RM1.52 previously.