In this Open Briefing, CEO Ren Wong discusses:
•  Rent Roll and Realty Acquisitions
•  New Business Integration
•  n1 Centre Chatswood and Outlook

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N1 Holdings Limited (ASX: N1H) (N1, the Company), a mortgage broking, property and financial services company in its first year of trading on the ASX has accomplished a full book of milestones over the past six months. The recent quarterly report lists some of the significant achievements being; acquisition of Sydney Boutique Property which includes profitable rent roll and sales pipeline, $80 million loan book acquisition, N1 Centre opening in Chatswood and successful commencement of N1 Migration Services. September quarter operational cashflow improved by 27% compared to the June quarter and customer receipts totalled $1.069 million. 

All this activity was achieved within the company’s vision to build growth via a diversified cross-selling strategy incorporated with external growth opportunities. 

What impact have these acquisitions made to the N1 business and have they been bedded down successful to now be contributing to the N1 revenue stream? Are there other targets similar to these that are potentially to be added to the N1 portfolio in 2017?

CEO Ren Wong
It has always been n1’s strategy to grow via diversification, and this year’s IPO enabled us  to further strengthen our growth via both organic growth and acquisitions. The acquisitions are mainly aimed towards complementary businesses, with positive EBIDTA or cash flow. 

There are many benefits with the acquisitions that we’ve made so far. Apart from the significant increase of cash flow, we managed to capitalize on the acquired database which has substantially improved our cross sell opportunities. We are still actively seeking acquisition opportunities as the company has a healthy cash level and cash flow. Future acquisitions would either be similar to our recent rent roll additions or complementing businesses that allow us to achieve economies of scale, thereby further improve growth and increase cash flow without substantial increase in operating costs.

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n1 Realty has been boosted by Sydney Boutique Property (SBP) which has a strong rental roll accompanying it as well as being located in the blue chip territory of McMahons Point. How as the integration process been executed and is the new realty business now branded as n1 Realty or will it remain under the old branding? Have you retained any of the experienced staff with the business? Is this acquisition a template for further growth?

CEO Ren Wong
SBP represented an opportunity that we discovered via our network and we could not be more satisfied with the deal. We are definitely very happy with the cash flow and the growth pipeline that SBP can bring to n1. However, I think the best asset of the acquisition is in the team of experienced property managers in SBP that we have now integrated into n1. This team further  strengthens our ability to offer property management services to the market, as well as to our existing clients from n1 loans and n1 realty. 

We are currently still actively seeking acquisition opportunities in this space, and in future we remain committed to retain the SBP brand, representing the high end property market of n1 especially in the local blue chip area of McMahons Point.   

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During the September quarter, n1 acquired an $80 million loan book that will boost revenue by $132,000. What are the standard loan periods within this book and what were the valuation multiples that were applied? Is that the industry sweet spot for your typical loan book and do you have capacity for further such acquisitions?

CEO Ren Wong
Growth in the mortgage business can come in two forms, either organic sales or by acquisition. In order to achieve a more efficient operational mass, an efficient acquisition strategy will ensure we blend both forms of growth time effectively. In order to build the business and therefore to build shareholder value in n1, we need to do both. While our organic sales pipeline is strong and is boosted by cross-selling opportunities to assist our customers, from time to time we will evaluate acquisition opportunities that we find. These must fit with our criteria for operational and cashflow requirements, and the nature of these acquisitions has to be complementary to our other businesses. For example, the loan book we have just acquired comprises a significant number of investors, and an n1 Business Development Manager will be able to contact these investors and offer our property management service to their investment property. 

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With the opening of the first n1 Centre at Chatswood, the company is commencing to establish n1 as a brand name in the financial services industry, not just as a mortgage broking business. Can you tell us about the operation of the n1 Centre since it has opened? What sort of business is being covered in the centre? What are your plans to roll out more n1 Centres in 2017?

CEO Ren Wong
The n1 Centre in Chatswood was opened in October and it has been a rewarding success from day 1 with a growing number of customers coming to sit down with our advisors face to face, to discuss a range of financial services. Many Chinese speaking people with poor English skills may feel embarrassed to ask important questions over the phone to their Australian bank, especially speaking of their own financial situation, and discussing borrowing and property investment. Not only can they access our multilingual staff on the telephone or via email but they can now come in and sit down to speak with someone in their own language. The benefit is twofold; a happier and comfortable customer and the ability for n1 to offer other service solutions.   

We remain committed to our Digital+Retail strategy. At the moment we are working closely with selected property developers, to allow them to capitalize on our retail presence for their marketing purposes, this way the n1 centre is acting as a physical platform for matchmaking property investors and property developers.
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n1 has now moved from partly commissioned based staff payments to a full PAYG model that will allow you to have a better handle on fixed costs and expanded opportunity to increase margins. How has the implementation of the PAYG model progressed and what sorts of impact are you seeing already to the business? 

CEO Ren Wong
The PAYG model has generated significant margin for the business, and more importantly, quality and compliance control. At the moment PAYG volume makes up more than 90% of our total loans pipeline, the best part in this model is our brokers are no longer commissioned salespeople, instead they focus on giving the best of customer service, because n1 marketing systems are supplying the leads to PAYG brokers.

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Can you give some commentary around the current activities, enquiry rate and conversion rate that n1 is achieving as well as some insight to the most recent months when property sales activity in Australia has been broadly communicated as very strong?

CEO Ren Wong
We are seeing a strong property listings pipeline but generally in certain suburbs only. The market is still strong as indicated by solid auction clearance rates every week. I do think the strong growth will only come from quality properties and the most sought after suburbs, which we see in the north shore of Sydney, still demonstrating very strong activity, interest and enquiry. In future investors need to be more careful in selecting where, what and when to invest into properties. The market that investors operate in today has evolved in many ways with technology, choice and services to assist them in the investment cycle. Which is why n1 is well positioned in the market to offer a one stop shop holistic service. This is very valuable to any investor in this market.

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What is the outlook for n1 in the coming new year of 2017? What will be the core focus activities for you and your team and the business overall, especially in a crowded mortgage market place?

CEO Ren Wong
At n1, we pride ourselves to be a one-stop-shop. We have evolved from being a simple mortgage broker. Now we play the role of a Financial and Property Services firm, and we want to be able to help any property investors and first home buyers to complete the biggest financial purchase of their lives. Also in this digital age where we can access smartphone financial apps and internet banking, it’s in fact more important than ever to be able to walk in to a centre, to do the very important face to face communication. And unlike walking into a bank, walking into an n1 Centre gives you proactive financial and property services. In 2017, n1 is committed to seek more positive acquisition opportunities, complemented by our strong cash flow and cash position.

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Thank you Ren.

For more information about N1 Holdings Limited, visit www.n1holdings.com.au or call CEO Ren Wong on (+61) 2 9262 6262

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