TA Securities initiates coverage on N2N Connect with buy call, TP of RM1.70

KUALA LUMPUR: TA Securities has initiated coverage on N2N Connect Bhd with a buy recommendation and target price of RM1.70 a share.

The research house said N2N, the largest Asian-based financial information and trading platform provider, is in the midst of forming a an Asia trading hub that will connect all its panel brokers via a single financial network.

"N2N is currently in talks with its strategic and substantial shareholder SBI Holdings Inc, a financial conglomerate in Japan, to enter into business alliances that will catalyse the formation of the Asia Trading Hub," it said.

It added that N2N is in a comfortable position to pursue mergers and acquisitions with its robust net cash pile of RM124.4mil. 

For FY18/19/20, TA projects earnings growth of 39.7%/22.5%/14.9%, underpinned by full-year contributions from AFE, traction with the Asian trading hub and cost synergies from the harmonisation of TC and AFE's suite of products and services. 

The research house said its target price-earnings of 35x is warranted based on N2N's double-digit earnings growth prospects, new revenue stream from the formation of the Asia trading hub, synergies from strategic partnerships and M&A and the latent potential from the government's plans to introduce an alternative trading system.