N2N: A Potential Fintech Play8th April 2019
In QE31/12/2018, N2N’s net profit rose 27% q-o-q but dropped 47% y-o-y to RM2.8 million while its revenue rose 10% q-o-q or 0.5% y-o-y to RM27.8 million. N2N’s net profit y-o-y dropped mainly due to lower unrealised forex gain in the current quarter. However, the core profit of the Group increased by 46.6% from RM1.99 million to RM2.91 million mainly due to the combination of lower operating cost and improved margins.
N2N’s profit after tax rose q-o-q but the core profit of the Group declined 4.8% from RM2.91 million to RM3.06 million mainly due to provisions for trade receivables. The q-o-q increase in profits was mainly attributed to the higher revenue and better margins for the current quarter in comparison to the preceding quarter. Revenue increased by 10.2% from RM25.24 million in the preceding quarter to RM27.80 million in the current quarter. [Note: The result for QE31/12/2018 was announced on 25 February.]
Table: N2N’s last 8 quarters’ P&L
Graph: N2N’s last 49 quarters’ P&L
Latest Financial Position
As at 31/12/2018, N2N’s financial position is satisfactory, with current ratio of 5.2x and gearing ratio of 0.23x.
N2N (closed at RM0.815 last Friday) is now trading at a PER of 32x (based on annualized core EPS 2.53 sen). At this PER, N2N is deemed fully valued.
N2N is in a long-term uptrend line (SS) with support of RM0.80.
Chart: N2N’s weekly chart as at Apr 5, 2019 (Source: Malaysiastock.biz)
Based on satisfactory, albeit weaker, financial performance, healthy financial position and positive technical outlook, N2N could be a good stock for long-term investment. It may benefit from a pick-up in equities trading in the region this year.
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