KUALA LUMPUR (March 18): Public IB Research has initiated coverage on N2N Connect Bhd with an “Outperform” rating and target price of RM1.08, and said while N2N’s history is short, its story is compelling.

In a note today, the research house said N2N is still helmed by the three founding members of the company who collectively hold close to 40% of the company’s paid-up capital provides comfort that minority shareholders’ interests will continue to be upheld in line with theirs.

It said it sees N2N primed for a sustained growth spurt in the coming few financial years, underpinned by the continued replacements of terminals by existing clients (at higher rates) and the increased adoption of the cost-advantageous TC Pro Global by new ones.

“Capital gains from share price appreciation owing to stronger earnings growth and with the added bonus of higher dividend payouts – an optimal investment proposition.

“We initiate coverage on N2N with an Outperform call and a PE-derived target price of RM1.08 premised on a 30x multiple to FY17 earnings per share of 3.60 sen, the high multiple justifiable in our view given the strong growth anticipated while our earnings assumptions also remain relatively conservative.