Firering Strategic Minerals: From explorer to producer. Watch the video here.
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as a Great Idea. Here's the article from this week's new issue:
"Kape Technologies is the cheap way to invest in the hot cybersecurity trend
A forward PE ratio of 6.4 looks like growth at an absolute bargain price
We believe the cybersecurity industry looks like a great place to invest for the long-run, and Kape Technologies (KAPE:AIM) is an under-the-radar way to do so.
As the number of hacking attacks on government agencies and major businesses surge, digital defence budgets are also rising rapidly, and increasingly consumers are having to think hard about how they protect themselves and their valuable online data.
Kape provides consumer cybersecurity solutions, moving rapidly to expand its suite of privacy and security services since 2016 through acquisitions, including Cyberghost, Intego, PIA and Webselenese for around $300 million combined.
Yet it was September 2021’s $936 million purchase of virtual private network group
ExpressVPN that promises to be transformational. Alongside bolstering its market strategy and research and development capabilities, Kape has already started realising ‘significant’ operational benefits, such as back-office cost-savings and
leveraging of economies of scale in infrastructure and marketing.
The group has relied on a combination of equity and debt raises to support this M&A, with equity raises include a $354 million placing in September 2021 to partially fund the ExpressVPN acquisition and, just last month, another $222.5 million capital raise to refresh its war chest.
Kape had been looking to raise approximately $100 million to $200 million but investor demand saw it raise more, including money from entrepreneur Teddy Saggi, whose Unikmind trust retained its 55% shareholding. Saggi founded gambling software firm Playtech (PTEC).
Such strong support for Kape will have been helped by compound annual growth of revenue and adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) of 56% and 83% respectively, according to Shore Capital analysis, since 2017.
Half-year results on 12 September revealed 217% revenue growth to $302.4 million, a 19% increase on a pro forma organic basis, and reiterated the full year outlook for 117% pro forma adjusted EBITDA growth at the midpoint of the guidance range of
$166 million to $172 million. Importantly, cash generation remains strong, having reported $352 million of free cash flow in 2021.
Gross margins run at over 90% although return on equity and investment metrics could do with improvement, at 9.6% and 8.7% respectively, according to Investing.com data. The company said in September that it is more confident than
ever in its prospects.
A 2023 calendar price to earnings multiple of 6.4, based on Shore Capital forecasts, means the shares are very cheap."
Thanks rivaldo for relaying this very useful assessment of Kape's outlook.
Hopefully, the shs will soon begin to re- rate to properly reflect the potential here, given this essential growth industry nowadays - sasa.
We keep getting tips and the same comments on under valuation and cheap, which is great of course.
Did you see the Berenberg broker rating, very strange I thought
https://www.lse.co.uk/news/KAPE/berenberg-lowers-target-price-on-kape-technologies-hbdetd3zvy9xqwa.html
I saw and read the Berenberg report and tried to take an objective view of it given I'm a big backer of Kape.
I think the banks report last November was pretty justified and actually very good analysis. Basically it worried about financial reporting/capitalising of costs/cash conversion (some other stuff there as well but those were the main)...
I think yesterday's was unfair to a degree. It had said last November they wanted to see how acquisitions bedded in and its clear from this year that it's going fantastically. I think a price cut from 410p when you were majorly unsure about acquisitions down to 270p when we have had a very strong year and superb acquisition integration is unjustified.
Just my opinion...seemed a little weird. Very keen to hear others thoughts e.g. Rivaldo etc
I agree with your comments here on Berenberg.