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Another good update in what is traditionally a slow quarter for tech. Seems very few PIs interested in cns either as a long term hold or trading stock.
Interesting to see cloudflares outage the other week, with cns focus not sure if they overlap markets.
Corero Network Security plc (AIM: CNS), a leading provider of distributed denial of service ("DDoS") protection solutions, conducted an Investor Presentation covering their Interim Results for the six months ended 30th June 2023.
Jens Montanana, Executive Chairman and Phil Richards, Chief Financial Officer ran investors through highlights of the period which included double-digit growth in annual recurring revenues (ARR). The management discussed the strategic partnership with Akamai who have 20% market share of the DDoS market, and how this further strengthens confidence in Corero's products.
The full video has been divided into chapters as below:
0:00:20 Introduction to Corero
0:07:50 Financial Highlights & Summary
0:11:47 Strategic Update
0:17:02 Summary & Outlook
0:18:33 Questions & Answers
Link to video: https://www.equitydevelopment.co.uk/research/corero-network-security-investor-presentation-interim-results-september-2023
In today's H1 results Corero Network Security
- delivered double digit growth in order intake, revenue and ARR
- they don't need to come back to the market for more funding and
- have attractive operational gearing.
In our valuation:
- we assume a conservative 10% rev growth rate in FY23/FY24 (below both historical growth rates for CNS AND market forecasts
- We don't factor in any contribution from major new partnership agreements like the one from Akamai which should have a material impact
Our fair value is double the current share price
Full note here: https://www.equitydevelopment.co.uk/research/double-digit-arr-growth
Good numbers again this morning.
A little concerned on the growth in operating expenses - but unlike some of my other holdings I actually trust the BOD to make the rights calls both strategically and operationally.
So software at virtually 100% margin, and getting other expensive sales forces to sell your product.
Will be on the call tomorrow, but expect to add to my holding.
This is being priced like a lot of the c*** on AIM requiring funding every two weeks. Really well run company, both operationally and strategically.
Two major league US tech parters
fraud risk close to zero: you can go to akamai website ffs
ev/rev of 4-5 would make more sense imv
if a few juicy new contracts drop, the sp should seriously motor (tp 15p++)
Super news again
In great addressable market
t/o target (and major owner might be even looking for some kind of cash back)
The senior management of Corero Network Security plc (AIM: CNS), a leading provider of distributed denial of service ("DDoS") protection solutions, will be conducting an Investor Presentation covering their Interim Results for the six months ended 30th June 2023.
The online presentation will be hosted by Jens Montanana, Executive Chairman and Phil Richards, Chief Financial Officer.
This event will take place at 11.00am on Thursday 21st September. The webinar is open to all existing and potential shareholders, and questions can be submitted during the presentation to be addressed at the end.
Link to register: https://www.equitydevelopment.co.uk/news-and-events/corero-investor-presentation-21sept2023
Jolly,
Yes, everything has been hit even those companies who continue to perform.
With ratios so poor in the UK it does make Corero a good acquisition target as it is accretive to existing ratios, even though Corero wouldnt make a dent in a lot of US wallets.
Disappointed to see Lionel go as the fruits of his tenure are still being felt in H1 this year. They do need a new CEO, just hope they pick up the right candidate to continue the execution.
Tbf, the whole subsector is trading at pretty low EV/rev multiples
I'm impressed with Jens' grip...interesting to see where next for management development (or is Jens just lining up a sale next year on the back of decent revenue growth? in which case, no senior management team to speak of is unnecessary/ would actually help lol)
Corero is a cyber software business that is overlooked by the market, in our view. Huge progress has been made over the last three years bringing the business to operational maturity. The company is predominantly now a recurring revenue business, but this does not seem to be recognised in the current valuation. Corero's technology has been validated with major market leading customers and go-to-market partners.
Group revenues have grown c20% compound between 2018-22A, enabling the business to fully recover its total cost base and report positive EBITDA since FY21A. Corero has repaid all outstanding debt and is now unleveraged. The recent trading update for H1E has confirmed strong trading with revenues growing 20% YoY to $10.6m and net cash on the balance sheet of $6.2m.
Back in 2019 the stock was trading around 5x EV/sales. On just 2x FY22A EV/sales the shares now, the shares look materially undervalued. We will be initiating coverage with forecasts in due course.
Full report: https://www.equitydevelopment.co.uk/research/corero-initiation-report-july2023
Great numbers.
Most of AIM is being shafted partially due to an expectation of discounted cash rises. Cns plenty of cash, growing with a highly leveraged p and l past breakeven, hot sector and seemingly very well focused and run. I was worried with the senior board changes, but these appear to show the company is not missing a beat.
Just what the doctor ordered.
Great rns after the less than exciting rns. Seem to have been focused on the business, hopefully a rerate.
Does help the business is not domestically focused on the site UK economy.
Anyone attend the AGM?
Agreed, there was a lack of vision, belief and strategy and for driving the business forward. Jens will need to be heavily involved to drive sales. Wonder what his plans are. I think Jens knew the business well and was looking to impart responsibility to the finance and marketing directors. But they felt new to the business . He was hands off when Lionel was involved. How does he go forward from here - a new CEO, or does he sell up?
Deeply disappointing investor meet, just seemed like it was interrupting their coffee break.
Level of detail and insight was kindergarten level, they clearly spent about 2 minutes beforehand on the slides and what the messaging should be. Ex CEO Lionel really did seem like he had pride in the company, these three seemed like they couldn't be a##ed.
Agreed results fair and in line with expectations. Reassuring to see other competitors were impacted by market conditions.
Toadhall,
Key stats for me.
1. customer retention
2. ARR / orders / contracted backlog (not specifically mentioned as a KPI) growth
3. look underneath the bonnet on revenue and the move from perpetual / one time model to AAS in the revenue category and point in time / overtime ratios
4. No need for a dilutive cash raise
5. Decent start to the current year
Results in April. Slumped a long way. What do people think of outcome? Too many red flags for results to be good? Both CFO and CEO leaving. ..
Just to correct - Koch didn't sell out, there are two RNSs re his holdings, one sell and one buy for the same number of shares and the trades are one minute apart - it's clearly just a transfer between accounts.
possible that Jens is a pretty tough owner to work for?
tbf, sales have grown 2018-2021, more than doubled...and fcf +was briefly achieved
it's just 2022 (and ceo/cfo departures in particular) that make this v tricky (almost uninvestible atm)
with huge tax losses (how long can they be used?), any sniff of resumption of growth makes this v exciting again
but why not 3-5p first?
I liked his presentations, but to me it just seems that he has given it 2.5 years, cant improve the company, if anything its about to hit another rough patch, so he's off. I guess anything would seem a better offer in that situation. The company has had long enough to make this a success and the fact they cant is very telling. Doesn't matter how good the manager is if his hands are tied by lack of funds and opportunities, it wont matter who is next IMO Jolly.
I honestly think the issue is very basic here, costs too high (mainly staff), sales too low.
Probably other similar products (its only DDOS prevention, not rocket science). Lack of funds allowing growth i.e. developing other products. Company is stuck too much in the hardware sector, which the Chinese will dominate (even the sw ip on the hardware - again its only DDOS protection). They don't really have a moat do they. Its just a box you buy once in 5 years. Yes there is a little bit of SaaS, but the market for that must be tiny. Seems many stocks are now using bad news to exit AIM on the cheap. A few more poor updates and perhaps take private for £10M. Its not out of the realms of possibility is it. Throw in a huge discount placing to allow anyone connected to average down before selling out. Look at YGEN.
Corero was born in 2007, having already been on aim as Mondas I could only go back as far as 2004.
https://www.lse.co.uk/rns/CNS/change-of-name-mod2jz4dkofogph.html
Jens reversed himself in to this sometime between 06 and 11 (my notes not great)
https://www.lse.co.uk/rns/CNS/disposal-fund-raising-and-directorate-change-2am9mae8ybuyz6i.html
In Feb 11, they purchased Top layer networks (that was the IP that all of this is founded on).
Loads of placings and loan notes etc. Koch invests around 2017:
https://www.lse.co.uk/rns/CNS/holdings-in-company-00e8963sc92wrxc.html
He got diluted twice in 2018 & once in 2019
So since 2012 they have had 11 years at this now, and not really breaking even let alone through.
Good luck all, but better investments (to serve PI's) out there.
CEO given up ? just sounds like he got a better offer elsewhere, US Nasdaq companies in particular can provide more share options than UK. Top talent in the IT software sector get approached on a monthly basis.
But this together with the CFO, who left for a very similar sized AIM company after being promoted to the board, is more of a worry. Interesting to see where he goes, as he's not on gardening leave cannot be a direct competitor.