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And still the dump continues, even after that TU. Seven odd days of blue since March. 40% down YTD. What gives? It’s not like we even have a lofty valuation. Pretty sad.
Small error needs correction, share price never went to 690p.
I'm holding both CNIC and KAPE and both look to have terrific upside:
Https://masterinvestor.co.uk/equities/the-internet-continues-to-offer-accelerating-growth-for-centralnic-and-kape-technologies/
"Kape Technologies – the good news keeps on coming
Yesterday morning Kape Technologies (LON:KAPE), the digital security and privacy software business, issued its Trading Update to end June.
The company is a leading ‘privacy-first’ digital security software provider to consumers. Through its range of privacy and security products, it focusses on protecting consumers and their personal data as they go about their daily digital lives.
It develops and distributes digital products in the online security space.
It operates through Digital Security, Digital Content, and Digital Privacy segments.
The company offers CyberGhost, ZenMate, Express, and private internet access that provide cybersecurity SaaS with a focus on providing of virtual private network solutions.
It provides Intego, a cyber security SaaS provider that focuses on the provision of malware protection.
In addition, the company offers software development; market research; consulting; and professional services.
Trading Update – with an 88.6% ARR
The first half witnessed and incredibly strong start to the current year, with sales expected to be some $301.6m ($95.5m), with over 88.6% annual recurring revenues.
Kape experienced strong organic growth across the business, with demand for privacy and security products on the rise.
Ido Erlichman, CEO, commented that:
“Kape has made a strong start to 2022, delivering on our organic growth ambitions and, more importantly, servicing c.7m customers who choose to use our products.
This has been our strongest H1 to-date, having delivered six consecutive years of growth and, with the integration of ExpressVPN progressing to plan, we are ideally placed to further capitalise on this rapidly growing market.”
Broker’s View – 405p on a 12-month view
Caspar Erskine, analyst at Singer Capital Markets, rates the group’s shares as a Buy, with a price aim of 405p on a 12-month view.
His full year estimate is for $618.5m revenues ($230.7m) a more than doubled adjusted pre-tax profit of $159.1m ($72.8m) and earnings of 39.2c (29.8c).
For 2023 he sees $690.7m sales, $181.7m profits, and 44.6c of earnings per share.
My View
I just love this company, even though it is now clearly outside of my normal ‘Small Cap’ market value range.
To me, just like with CentralNic, it is an arithmetic and highly scalable situation.
The growth in its ARR is so appealing, while the cash generation it creates is fantastic.
The group’s shares went up to 690p on the announcement late last year of the Express VPN acquisition. It may take a while to get back up there again but I am still firm in my prediction of 600p.
They closed last night at 287.5p – a very strong hold."
Pro forma adjustments are poorly named. They are meant to move us onto a like for like basis. Kape made a major acquisition during the year so big adjustments are required to get like for like.
Kape seems to have done very well to integrate express vpn and make good progress towards realising potential synergies. Turning promise and potential into money in the bank is very difficult. Hats off to Erlichman. These accounts show a great start has been made with every indication that more synergies will follow.
Been on hols so pleased to see the excellent HI update. KAPE looks ridiculously undervalued imo.
Given $88.5m EBITDA in H1 alone, KAPE look like thrashing the guidance of $166-$172m for the year since they've already achieved 51.4% of the top of that range in H1 and the outlook signals continued growth.
With huge recurring revenues and such a low P/E KAPE should be heading towards 500p-600p ceteris paribus (that's one for Latin lovers).
The headline growth is extremely impressive but the "pro forma" adjustments reduce the growth figures considerable, albeit they are still good. The only apparent negative point seems to be the reduction in margin. That said, I, for one, do not really understand what the pro forma adjustments are and particularly why they have such a large impact on the figures. Without a clearer exlanation of what this all means, I suspect the shares will remain in the doldrums during these uncertain times. Can anyone shed any light on the pro forma adjustments?
This is brutal. Seems the market has completely forgotten the AGM statement less than a month ago. Should get a TU next week to remind it and hopefully reverse this decline!
ATB
Https://masterinvestor.co.uk/equities/small-cap-round-up-purple-shirted-fairies-hackers-and-pvc/
"Kape Technologies (LON:KAPE) – a ‘thundering’ generator
This company really is one of my ‘ace picks’ in the digital security and privacy software business sector.
Last Thursday saw Don Elgie, the group’s Chairman, tell shareholders that the group was proceeding well to plan so far in this current trading year.
His AGM Statement covered the 2021 financial year as being ‘transformational’ with its sales up from €122.2m to €230.7m, while adjusted pre-tax profits were up nearly 142% at €72.8m (€30.1m), and earnings up 121% at 29.8c per share (13.5c).
The biggie, of course, was the acquisition of ExpressVPN late in the year, the benefits of which will start to show through in the next few years as massive cross-selling gets underway.
Elgie went on to say that:
“Kape is a leader in the consumer security and privacy space, servicing some 7m paying subscribers worldwide and growing. We expect our strong customer growth to accelerate further as the privacy and security markets become more mainstream, with consumers increasingly viewing our products as critical components for their daily digital lives.
Looking ahead, we are also focused on further leveraging our significant M&A experience and extended product pipeline to accelerate our market, product, and SaaS customer reach.
Kape is now in prime position to lead the market given our current growth trajectory, and we look forward to expanding our footprint through organic growth and strategic acquisitions, as we have done consistently over recent years.”
This really is a ‘classic’ business that has massive upside.
Analyst Caspar Erskine at Singer Capital Markets rates the shares as a ‘buy’ with a price objective of 500p per share.
For the current year he sees revenues more than doubling to €618.5m, with profits more than doubling to €159.1m and earnings lifting to 39.2c per share.
The coming year to end December 2023 shows his estimates at €690.7m sales and €181.7m of profits, with earnings of 44.6c per share.
Despite having risen 36p to close at 364p on Friday night, I believe that this is a ‘cheap’ price.
The group’s cash generation and massive annual recurring revenues would make it an absolutely cracking takeover proposition for any aspiring private equity player on the global stage.
I am very much more bullish than Erskine.
The shares are totally undervalued – hold very tightly indeed."
Another afternoon surge to follow Friday's. Simplistic I know, but perhaps this indicates American buying interest?
Great move on Friday, probably simply institutional reaction to the terrific prospects here and the encouraging AGM statement.
In addition (not posted here before), last Monday Mark Slater did a podcast and stated he'd been adding to his position in KAPE and outlined why - it's from around 23 minutes in here:
Https://uk-podcasts.co.uk/podcast/master-investors/is-the-bear-market-over
Lot of buys going through today
Singer have just released a new broker note ..
Impact on earnings & valuation
Kape looks well placed to deliver against our organic growth forecasts of 10%-15% in FY’22e. The demand backdrop continues to look robust (subscribers: c7m; FY’21: 6.6m), whilst cross-sell of additional products into the Group’s subscriber base is also likely to be enhancing average revenue per user. With a scaled subscriber base and attractive operational gearing profile, particularly as the proportion of renewals increases versus new adds, we continue to forecast meaningful FCF progression in FY’22e. We project FY’22e FCF of >$130m (FY’21: $34m), supported by the acquisition of ExpressVPN, and equating to a 7.5% FCF yield.
We reiterate our BUY recommendation, with a price target of 500p/share.
excellent Rivaldo and all on track to continue growth ...
https://twitter.com/surprised_trade/status/1537327244980506624
"record Q1 performance fuelled by robust organic growth'' well-positioned to deliver revenues of between $610-624m aEBITDA of between $166-172m,a c. 116.7% expected increase for year 2022. '
A very encouraging AGM statement today, with "a record Q1 performance fuelled by robust organic growth".
Everything is on track for Shore's 40.6c forecast this year, i.e around 33p EPS - which is a ridiculously low P/E of 10.4 for a global market leader in cyber-security, VPNs etc.
Plus it looks like there's considerable savings being made on the ExpressVPN acquisition, the digital security division has "experienced accelerated growth", new products are being launched and new segments being entered....plus further acquisitions are still on the agenda:
Https://uk.advfn.com/stock-market/london/kape-technologies-KAPE/share-news/Kape-Technologies-PLC-AGM-Statement/88377322
Why bother timing the market on such small margins? So what if it falls another 10 or 20% from here. We are looking at a possible world leader in 5 - 10 years and a multi billion dollar franchise.
It does seem a good price now, but it hasn't taken a hammering this year like many others stocks. If the markets weren't so soft, I would be a buyer now.
by Mark Watson-Williams as follows:
Https://masterinvestor.co.uk/equities/small-cap-catch-up-kape-itim-and-hsp/
"Kape Technologies (LON:KAPE) – cross-selling opportunities abound
I consider that the share price of this digital security and privacy software provider does not reflect its significant potential.
In the last few years, it has grown very substantially through both its organic and its acquired expansion.
It now has over 6.5m paying subscribers for its services.
Through that rapidly built-up platform the group is an excellent example of scalability.
Its prospects for cross-selling its various products and services expand massively as the group pushes its growth strategy.
And that market widens as the company and its various subsidiary operations develop and present new features for its products.
The customers of the group’s recently acquired ExpressVPN, the premium digital privacy and security player, for which Kape paid $936m, are being targeted with Kape’s other products and services.
ExpressVPN is an excellent fit into Kape’s business and has taken the latter into scoping the virtual private network’s 3m plus subscribers, some 40% of whom are based in North America.
Kape was already global, but ExpressVPN has really boosted its marketing opportunities.
This group will not stand still, it seems, and it is a fabulous money-machine.
The company’s NOMAD and joint-broker Shore Capital Markets last week noted that the group is now introducing several new features to its ranges, including: Threat Manager, a privacy protector; Parallel Connections, which optimises VPN connection time; and Keys, which is a password manager for applications.
Shore analyst Martin O’Sullivan estimates that revenues will increase this year to end December from $230.5m to $617.8m, with adjusted pre-tax profits more than doubling to $151.0m ($72.8m), helping to pump up earnings from 23.1c to 40.6c per share. That latter improvement was despite the massive equity dilution from the ExpressVPN deal.
For next year O’Sullivan goes for $697.3m of sales, $173.5m profits and 46.5c per share in earnings.
Those estimates convince me that I am right in stating that the shares of Kape Technologies are really quite attractive at the current levels, with its shares at 344p, which is a clear 100p lower than they were trading at in January this year.
I expect to see the next Trading Update in early July, by which time the shares could well be a lot higher."
FYI Shore Capital have issued an update note today reflecting the new products announced today, but also picking up on the cybersecurity sector comment:
"We note that KAPE also highlights that the cybersecurity sector is "delivering its strongest quarter on quarter growth to-date,and so the new privacy and security solutions could be said to be hitting the market at an opportune time".
For this year they forecast 40.6c EPS, rising to 46.5c EPS next year, i.e 37.6p EPS - a P/E of just 9.1.
It's good to see the variety and number of new digital security and privacy products being introduced by KAPE in today's announcement.
But just as interesting is the following, which hopefully reflects KAPE hinting as to the strength in current trading:
Https://uk.advfn.com/stock-market/london/kape-technologies-KAPE/share-news/Kape-Technologies-PLC-Kape-expands-service-offerin/88084165
"The launch of a number of highly innovative new products, in addition to enhanced features on existing solutions, is closely aligned with significant demand across the digital privacy sector. With the cybersecurity sector delivering its strongest quarter on quarter growth to-date, Kape continues to be firmly focused on delivering best-in-class privacy and security solutions that safeguard consumers' digital lives".
Nice rise today. KAPE's AGM trading statement must be imminent - last year's was on 20th May. Presumably we'll get a Notice of AGM soon.
I'm looking forward to it following strong trading reported in the prelims outlook.
endlessly somersaulting down the hill - can't see the problem? puzzle? when to statrt buying again?
Strange downward drift once again in the SP. Oh well, time for another top-up if it goes much further. This share’s price movements are becoming quite predictable.
Shore Capital's new note published post-results has forecasts of 40.6c EPS this year, rising to 46.5c EPS next year, i.e around 30.5p EPS rising to 35p EPS next year.
That's a P/E at 380p of 12.5, falling to 10.9.
The note concludes as follows:
"Valuation
At 430p and 13.6x EV/EBITDA for FY22F (13.9x PER), the balance of medium-term opportunity versus risk looks attractive to us, given KAPE's high-growth potential and other factors. Backing this is strong execution to date (both organic and M&A) and the growth prospects for the enlarged Group. With high recurring revenues, a large and growing user base and a strong earnings outlook, KAPE looks well set for the year ahead and beyond."
Puzzled why this good quality share has lost sentiment in such a short time. No need for it?
Kape gets another mention tonight in IC -
'Seeking out companies in consolidating sectors can reap hefty rewards. Cybersecurity software provider Kape Technologies ( KAPE: 390p) being a case in point. Buoyed by a combination of organic growth and well-timed earnings accretive acquisitions that continue to deliver revenue and up-selling opportunities, ... I remain positive on the investment case (‘Profit from cyber security’, 22 March 2022), especially as analysts at Progressive Equity Research predict cumulative operating cash flow of $400mn (£305mn) (87p a share) will slash net debt to $39mn by the end of 2023, thus transferring the economic value held in the entity from debt to equity holders.'
500p+ target