KUALA LUMPUR: AmInvestment Bank research has maintained its buy call on N2N Connect Bhd
at an unchanged fair value of RM1.18.
In its company update, the research house noted that N2N has signed a memorandum of understanding with its 20.36% stakeholder SBI Holdings Inc to collaborate on a blockchain-enabled trading platform.
"The blockchain-enabled trading platform works by digitalising the trading of multiple financial instrument in one venue, including equities, derivatives, currencies etc. We believe this would potentially revolutionise the current trading practices," said AmInvestment.
It added that the platform will allow for instantaneous tracing of asset ownership rather than the T+3 settlement method under the current system.
It would also allow for fractional share trading whereby a fraction of a share can be bought or sold, which will increase affordability of higher priced securities.
According to AmInvestment, the initaitive is aimed at expanding N2N's regional footprint and expedite the setting up of an Asia Trading Hub that allows cross-border trades.
It said N2N is working on the first phase to connect Malaysia, Singapore and Hong Kong, targeted for completion by end Q1FY19.
The second phase will involve the Philippines, Thailand and Indonesia. Vietnam and Taiwan will be connected in the final phase.
Over the near term, AmInvestment expects eaernings to be driven by an industry-wide replacement of back office systems (BOS).
It noted that there are currently 28 brokers in Malaysia and a traditional BOS typically costs RM8mil to RM12mil.
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