In this Open Briefing®, CEO Ren Wong discusses:

- Listing success

- Recent Milestones

- Strategy for Growth

- Overview and Outlook

Record of interview:

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N1 Holdings Limited (ASX: N1H) (N1, the Company), a mortgage broking and financial services company, recently listed on the Australian Stock Exchange after issuing 25 million shares at $0.20 per share to raise $5m. Total number of fully diluted shares on issue is 88,021,250 bringing the current market capitalisation to circa $17.6 million. What was the purpose of the listing of the company and where will you be employing the funds raised in the IPO? What is the key focus for the funds and what will it bring to the company?

CEO Ren Wong

The ASX listing seemed the right way to go for N1 and with the stock now trading at a 25% premium to the IPO price, I think this shows that it has been a successful listing for all shareholders. Due to the success that the company was finding within the Chinese speaking community, it was clear that there was a large and growing demand for our services. We realised that the model we had developed for the New South Wales market and the Chinese speaking investment community could be replicated across the rest of Australia. Going to IPO seemed a logical step to enable the business to accelerate expansion in to other states as well as develop our offshore presence. N1’s strategy also includes diversification of the financial product offering to include business loans, car loans, investment loans, insurance and financial planning. We also see opportunities via select acquisitions that will enhance company growth.

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N1 provides a range of financial services including; home and investment lending, financial planning, car loans and insurance. What is the model that N1 employs that allows the company to provide competitive rates and offerings?

CEO Ren Wong

Unlike most other mortgage brokers in the market that rely are predominantly a commission based model, N1 has predominantly a model that sees salaries as fixed costs. The move to this model has seen us improved gross profit significantly. N1 has also enjoyed strong reputation in customer service because our mortgage brokers focus on building strong relationships with clients, allowing for a better service package, without having to do the legwork of getting sales. Over time this has resulted in high proportion of word-of-mouth referrals. And with our high volume dealing with multiple lenders, we have significant negotiation power and an improved response service such as lead processing time, from lenders. It’s like a snowball; clients are happy with our dedicated service, referring more clients, hence we are bringing more clients to lenders in turn we are getting better rates and services being offered to more clients. In the past this is hardly been achievable but we are seeing a benefit because ultimately mortgage broking is about relationships.

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N1 Holdings has developed Australia’s first and only Chinese language mortgage comparison website, www,Chengdai.com.au (Chengdai) which has seen success in providing a pipeline of investment loan enquiry from within the one million Chinese-speaking Australians that are in the market for an investment property. What is the key to the success of this website and what growth are you seeing in the enquiry driven from the site?

CEO Ren Wong

The key to Chengdai’s success is that we bring complicated matters, such as home loans, to clients in their most comfortable native language. Financial products come with a wide range of various conditions and features and although most of our clients speak English, it’s always easier to comprehend in their own native language. Apart from that, the website also brings transparency of fees and options in the market, saving clients potentially thousands of dollars in annual interests.
Chengdai.com.au has only been in operation for 12 months but it has reached significant scale in terms of the awareness in the market, outside of our geographic location. Post IPO we now have the funds to promote and develop the website awareness into other major capital cities such as Melbourne, Brisbane and Gold Coast. But its not just home loans; the car loans comparison website is in fact gaining big traction too. A lot of people might have thought a Chinese language website attracts visitors from China but in fact we have over 99% website visitors coming from local Australian community.
The one million Chinese-speaking Australians is more than justifies spending more to develop this platform to target investors coming out from China, HK, Taiwan, Singapore, and Malaysia. Those are the countries who have foreign buyers speaking the same language. The other key growth area is the other niche language website, we can easily translate the website in Korean language and serve the local Korean community.
The effectiveness with a comparison website is it brings value to clients 24/7 without geographical restrictions. All the growth we have had to date was only coming from Sydney Chinese speakers, indications are that we’ll see similar growth from other Australia major capital cities plus other countries who are active property buyers into local Australian real estate.

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What are the current plans for the company to expand the business and where are your immediate focuses for this? How much focus will the company place on generating enquiry from Shanghai and other Asian regions?

CEO Ren Wong

We plan to grow aggressively, both by means of organic growth and acquisitions. We have an office in Shanghai, China and Kuala Lumpur, Malaysia. These offices immediately align our diversification strategies in terms of products and geography. Both offices are starting to offer migration and off the plan properties to local area clients, in turn that will complement our home loans and commercial loans business. We find it is like a chain reaction; a client who wants to migrate to Australia, would need to buy a property to live in, hence will need a home loan and other products that we can then provide once we’ve established trust, performance and built the relationship. We believe that integrity is a key pillar of the way we do business and how we want to be perceived in the market.

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Can you expand on the overseas enquiry that you are deriving from Chengdai and what plans are there in place to develop this successful strategy further?

CEO Ren Wong

Chengdai has minimal presence overseas, at the moment most leads are coming from the local Australian-Chinese community, that also means we have a huge untapped potential in Asia. We definitely want to develop strong presence overseas especially in the China region, this will come together with our migration and property sales roll-out strategies in that country. Via our partnerships and referral agreements Chengdai will be promoted and it will become the ‘go to’ site for Asian investors looking for property financing for Australian investment. Our Search Engine Optimisation is also excellent and ensures Chengdai is building a solid footprint.

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Recently there has been a tightening in the Australian banking market for overseas investment lending, especially seen by the top four Australian banks. How has this tightening impacted N1, the enquiry for loans and the offering you can provide?

CEO Ren Wong

We view the recent tightening of the offshore investor borrowing rules as an opportunity for us as our value proposition for customers is the provision of a large range of lenders for them to choose from. Our clients are not restricted by this tightening by the major banks.
At these times, it’s more important than ever that potential borrowers to rely on reputable and comprehensive mortgage brokers or chengdai.com.au in order to be able to view a large variety of options in the market besides those on offer from just the big four banks. Although overseas lending hasn’t made up a majority of our business in the past, we do see this as an opportunity for us to capitalize on the market conditions.

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Since the company listed you have announced several Referral Agreements, notably with 1300Homeloan and also with Dream Designs. What is the strategy behind these agreements and how significant is it for N1 to have these partnerships?

CEO Ren Wong

Referrals from our partners represents large and growing distribution channels for our products. We are in the fortunate position to have the opportunity to work with those wonderful companies. N1 has been relying on a wide referrals base to generate business before chengdai.com.au went live online. And having the website up and running makes us even more attractive to referrers as we are seen as the authoritative figure in giving home loans advice.
Referral agreements directly increase of number of leads, and an increased volume of loans, plus we are able to cross sell all other services that we can offer. And conversion from a referral is typically higher so these agreements provide a win-win outcome for us and for our referral partners.

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Can you comment on lending enquiry and conversion and the current Loan Book growth? What can shareholders and investors expect to hear from N1 over the coming quarter?

CEO Ren Wong

We have completed our transition into PAYG model and pleased to far, to see very positive results. Our products diversification strategy is working ahead of expectations and we have seen non-home loans revenue make up about 3% of overall revenue, which is impressive given a short period of time, and bear in mind these were all done pre-IPO. The loan book has grown significantly and I am very encouraged to see the accompanying increase in trail commission figures. I believe shareholders and investors can expect to hear from N1 over the coming quarter showing that it is not just the increase in loan book that we are seeing but also increase a number of new revenue streams with very positive outlooks. So if you look at our past performance, remember that was organic growth in home loans and predominantly only in Sydney, pre-IPO. In the coming quarter people can expect to see growth coming from multiple cities and multiple revenue stream as we now act on the company strategy and focus on growing and developing our people, products and business.

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Thank you Ren.

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

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