STOCK FOCUS OF THE DAY
N2N Connect: Offering end-to-end solutions Buy
We initiate coverage on N2N Connect (N2N) with a BUY and a fair value of RM1.52/share. Our fair value is pegged to an FY19F PE of 25x, a discount to the peer average of 33x given its smaller market capitalisation (see Exhibit 7). The stock has been trading at an average PE of 35x in the past 3 years. Including an expected dividend yield of 3%, the stock offers an implied upside of 49%.
We believe the market has not fully priced in a major earnings boost from the acquisition of AFE Solutions (AFE) last year. N2N’s revenue more than doubled in FY17, lifting its core net profit by 36% after a 9-month consolidation of AFE’s results. Moving forward, N2N's earnings are expected to accelerate further as the group fully unlocks synergies from the acquisition.
Others:
CIMB Group: Lower provisions with an improved CI ratio Buy
BIMB Holdings: Asset quality remains strong albeit upticks in impairment Buy
HLFG: 9MFY18 earnings ahead of expectations Buy
Bonia Corp: Takes a hit in 3QFY18 Hold
Hong Leong Bank: Bank of Chengdu contribution still strong Hold
IJM Corp: FY18 core net profit declines 16% YoY Hold
IJM Plantations: Hit by declines in CPO production and price in 4Q Hold
Kimlun Corp: A soft patch in 1QFY18 Hold
Media Chinese: Prospects remain unexciting Hold
TH Plantations: In the red in 1QFY18 Hold
Oil & Gas Sector: Lower volume and stronger ringgit dent Petronas’ profit Neutral
ECONOMIC HIGHLIGHT
Indonesia: Asia policymakers under pressure to raise rates
NEWS HIGHLIGHTS
Hap Seng Consolidated: Targets RM1.3b GDV in launches this year
MyEG Services: Hopeful on relationship with new govt
I-Bhd: Maintains its stellar quarterly performance
Paramount Corp: Sees better year in 2018
DISCLAIMER:
The information and opinions in this report are prepared by AmInvestment Bank Bhd. The investments discussed or recommended in this report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a solicitation to buy any securities. The directors and employees of AmInvestment Bank Bhd. Bhd may from time to time have a position in or with the securities mentioned herein. Members of the AmBank Group Bhd and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein. The information herein was obtained or derived from sources that we believe are reliable, but while all reasonable care has been taken to ensure that stated facts are accurate and opinions fair and reasonable, we do not represent that it is accurate or complete and it should not be relied upon as such. No liability can be accepted for any loss that may arise from the use of this report. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice.
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