N2N (0108) - N2N shares jump nearly 18% on strong results

KUALA LUMPUR: N2N Connect Bhd’s shares jumped almost 18% in early trade following its strong earnings results.

The counter rose 13 sen, or 17.81% to 86 sen with 6.9 million shares traded.

PublicInvest Research said N2N reported a strong 2QFY17 net profit of RM9.9mil (+246.7% YoY, +174.4% QoQ), contributing to a 1HFY17 net profit of RM13.6mil (+135.1% YoY).

This includes an unrealised foreign exchange gain of RM3.9mil on a US dollar loan and fair value changes on financial assets amounting to RM0.8mil however.

“Stripping these off, 1HFY17 net profit is in line with expectations at 52% of full-year estimates,” PublicInvest said.

It added that N2N’s recently-acquired AFE Solutions Ltd was starting to make a difference to numbers, though it would see more pronounced effects on the bottomline only in FY18 onwards as 2017 would see rationalisation-related costs taking a bite.

“Our earnings estimates are left unchanged. We continue to view N2N’s prospects favorably and retain our ‘outperform’ call on the stock,” it said.

“Our target price is lowered to RM0.92 (RM1.08 previously) as we rollover our valuations to FY18 and tag a lower PE multiple of 15x (30x previously) to EPS of 6.1sen,” it said.

It added that the lower PE multiple was not reflective of a lack of confidence in the group’s prospects, but rather an erring on the side of greater conservatism for consolidation-related issues in a significantly more competitive market, if any.

“There is scope for earnings upsides however, as management is optimistic of extracting synergistic benefits much earlier than expected,” it said.

http://www.thestar.com.my/business/business-news/2017/08/28/n2n-shares-jump-nearly-18pct-on-strong-results/