N2N The East Looking Giant in the making?

While Tun M is visiting Japan this week, let us look at a counter which has close ties to the “EAST” which is N2N. 

If you were to look at the rolling 4Q PE of N2N which is standing at 20 times, then it is consider as a very expensive counter. On the other hand, looking at its technical chart, I would say it is madness! 

This is because the share price had rocket from lowest RM0.70 to RM1.2 in 2 months. 

Well, Big Canon wouldn’t want to comment much on that.  

Source: ChartViewplus.com

However, the news and announcement on 6^th June had given me a shock. This is because N2N is doing private placement and this portion of shares is to an investor which is SBI Holding Inc.

Big Canon is quite surprise as this is the 3^rd Japanese company that come in to N2N after Nikkei Inc and Quick Corp.

Source: http://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=87549&name=EA_GA_ATTACHMENTS

Assuming these shareholders above is not selling their shares, and add up with SBI Holding Inc, then the total shareholding will be:

Note: SBI take 10% of current shares issued, hence there will be a dilution to 9.09%

Assuming all the major shareholders are not letting go their stake, then they will be holding 64% of N2N shares. 

We’ve been talking about SBI Holding since the beginning, 

so what is so special about this company? 

Source: https://en.wikipedia.org/wiki/SBI_Group

Softbank, yes, this company use to be the subsidiary of Softbank which is also famous for being 1 of the largest shareholder in Alibaba. Anyway, they had sold their stake to Goldman Sachs Japan back in August 2006.

Source: https://www.japantimes.co.jp/news/2006/08/03/business/softbank-cuts-ties-with-sbi-holdings/#.Wxo26p8zZPZ

After knowing some history of SBI Holding, now let’s have a look at the company business. 

Source: http://www.sbigroup.co.jp/english/investors/library/annualreport/pdf/2017ar_e-all.pdf

According to 2017's annual report SBI is involve in:

1.      Financial services Businee

2.      Asset management Business & Insurance

3.      Biotech

Things below could explain well why they buy stake in N2N which is involve in financial services business. 

From the statement, we can see the company is moving from FinTech 1.0 to 1.5 and its 2.0 now. We can see the company is always moving ahead of the market and that’s also the reason for them to have explosive growth.

Big Canon guess this part helps to explain why SBI Holding bought 10% of N2N shares. They are trying to speed up their progress in FinTech through alliance with companies outside the group. What do you think? 

According to the details we found from the annual report, we can see that SBI Holding is a company that is consider pioneer in Fintech where Ripples is 1 of their most famous thing where it is a real-time gross settlement system (RTGS), currency exchange, and remittance network.

Used by companies such as UniCredit, UBS and Santander, Ripple has been increasingly adopted by banks and payment networks as settlement infrastructure technology, with American Banker explaining that "from banks' perspective, distributed ledgers like the Ripple system have a number of advantages over cryptocurrencies like bitcoin."

Source: https://en.wikipedia.org/wiki/Ripple_(payment_protocol)

So what benefit could SBI Holdings bring to N2N? 

According to the announcement on 6^th June, N2N mentioned that they are in discussion with SBI Holding to enter into biz alliances which involve strategic collaboration, joint ventures or alliance with SBI group.

This could be a very exciting story ahead for N2N, and we believe this could create exponential growth to N2N!

So what could it be?

Crypto platform? Alternate trading system? New technology? Auto trading? online Insurance platform? online fund management platform? Bond trading platform? 

Well, Big Canon still have no idea at this juncture and we will have to wait patiently for further official announcement from the company.

We could monitor close;y the steps that they are going to take.

The 1^st step of this exciting journey will be the private placement, after that would be getting approval from Bursa.

2^nd Issue new shares to SBI Holding

3^rd Announcement on the new business alliance and acquisition

4^th EGM for the new business if there is any diversification.

Could this be the beginning of another exciting journey??? 

Well, we can’t jump into conclusion but we can monitor N2N closely and read their announcement.

Anyway, from chart wise, we saw that the share price had already shot up from RM0.70 to RM1.20 within 2 months and seems like a lot of sellers above RM1.23 lately. 

Big Canon is not sure whether will it move higher in short run, however, we shall monitor it closely. 

Big Canon believe N2N could be the next big thing if they could collaborate with SBI Holding and come out with some new fintech product which is disruptive enough. It could give the company an exponential growth and crazy valuation if N2N manage to make it. 

Please always bear in mind that Big canon is not giving any buy or sell call, always bear in mind, Big Canon don’t give buy or sell call. Our articles only serve for education sharing purposes. 

May all the HUAT be with us!

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