Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
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Nice start - overhang cleared?
As for Berenberg, they believe "the shares could do well in the near term", yet lower their target price hoping for a boring and "clean" set of results which they know full well will never arrive since KAPE's acquisition strategy is known to all and sundry! And as far as I can remember KAPE's cash flows have been excellent for some years now given the nature of their services, which are in the main prepaid. Bonkers. I suspect Berenberg have some clients who they want to get in to the stock at low prices.
Huge liabilities still to be satisfied from these acquisitions., though recent capital raise will help. Accounting is a nightmare of deferred income/contract costs. Hence Berenbergs focus on cash flows.
Berenberg might be right though. Buying companies sometimes leads to more inefficiencies. Frequently they try and shoehorn the new business into theirs and what happens is they lose customers as the business model is different. The smaller business made a profit as it was agile and customer focused. Things then change and customers don't like it and look elsewhere. I've seen it in my company, they spend millions then kill the goose they bought. Also it might be good!
I agree with your comments here on Berenberg.
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
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
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.
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."
agreed, very clever!
Clever stuff - payroll unicorn Remote will provide "its global customer base" in 150 countries with access to Kape's VPN providers. Per the RNS this provides "tens of thousands of people" with the opportunity to utilise Kape's services for privacy online:
Https://uk.advfn.com/stock-market/london/kape-technologies-KAPE/share-news/Kape-Technologies-PLC-Kape-Expands-its-Distributio/89553409
Yes. It started when the Nas opened like yesterday.
The volume today on this thing in a matter of two hours!!!!!!!!!!!!!!!
Doubled up yesterday at £2.17. The price doesn’t make much sense really but MMs in charge. I recall another share over a year ago that was in a similar situation SLP. Analyst pointed out that the market “wasn’t working” as it should. Price moved up a fair the days after. Who knows but downside must be minimal here I’d think. DYOR etc
SCSW have now sent out their November issue, so it should be OK to paste their commentary on KAPE's interims from the previous issue FYI:
Https://www.scsw.co.uk/article.php?id=9556
"Kape - To unveil Websitebuilder at forthcoming capital markets day
267p Epic code: KAPE
(Sharewatch) Kape has been dramatically sold off from the 440p high in March despite not putting a foot wrong. Including a maiden contribution from ExpressVPN, which was bought last December, sales for H1 to 30 June were up 217% to US$302m (+19% organic), pretax profit was +362% to US$46.2m and eps +279% to 34.1 cents. Adjusted EBITDA increased 210% to US$88.9m.
Kape’s performance was driven by growth in the user base while retaining 82% retention rates, with user numbers hitting 7m, up from 6.6m six months earlier. Adjusted EBITDA margin was 29.4%.
The Digital Privacy segment (6.1m subscribers) experienced continued growth with sales up four-fold to US$253.5m at a gross margin of 51%. Chief executive Ido Erlichman says that post acquisition, by September it had successfully integrated the customer support and R&D functions. This will realise US$9m in synergies (four months in 2022) and US$30m on a full year basis. From the product pipeline new products are being developed and added to the SaaS platform, with increased functionality helping to keep the average cost at US$99, almost double the price of rivals and retention rates are high.
The other two sides also performed well. Digital Security was up 16% to US$21.4m (37% margin). Meanwhile, Digital Content sales were +25% at US$27.5m (19% margin), which was depressed by investment in a move into new verticals eg. Website Planet, a website building service for which strategy will be unveiled at a forthcoming Capital Markets Day, says Erlichman.
The other big new news to accompany results is that Kape intends to pay the deferred US$345m consideration for the acquisition of ExpressVPN early. Early repayment basically results in replacing the short term deferred consideration with a long term debt and shaves perhaps US$30m off the consideration. Separately, Kape has raised £171m at 265p. Existing investor Unikmind subscribed to £94m worth of the available shares.
Shore Cap forecasts 40.6 cents for the year (eps 36.3p), a prospective PE of 7.4. Buy."
I did buy last year and sold, but have bought in again at £2.21. Nas might be looking at slight recovery, who knows but thei one does look a low price vs its peers.
https://simplywall.st/stocks/gb/software/aim-kape/kape-technologies-shares/news/what-is-kape-technologies-plcs-lonkape-share-price-doing
Does seem to be a lot of buying again
2mm quid now worth of buys....something leaked?
08-Nov-22 11:39:39 218.50 100,000 Buy* 210.00 220.00 218.50k O
08-Nov-22 11:37:07 217.50 150,000 Buy* 210.00 220.00 326.25k O
Nice to see.
Agreed on good buying yesterday especially but delayed trade which looks like sell this morning
213.00 £298,315
*Placing took place in September not October, however on the director deals section, it says the 3rd of October.
Crazy at this price considering the 265p placing last month. Bought in.
Someone's keen - nice start today with £65,000 of stock being bought on the bell in three tranches of 10k shares each. Which caused the buying price to move up to 217.25p.
The IC last week surveyed their top 100 AIM companies - this was their verdict on KAPE:
"19. Kape Technologies
Kape Technologies (KAPE) owns several different virtual private networks (VPNs) – apps for browsing the internet privately. VPNs are useful because they are secure, but they also mask users’ IP addresses. This capability has been particularly useful in Russia of late, with the country trying to ban users from accessing particular sites onthe internet.
In the six months to June, recurring revenues jumped 354 per cent to $268mn (£231mn) year on year and now make up 89 per cent of total sales. With most of the revenue coming through auto renewed subscriptions, cash conversion is an impressive 101 per cent. That growth has helped reduce the net debt pile from $458mn to $392mn. This substantial amount of debt is largely due to recent acquisitions, but strong cash generation means it should be manageable.
The company has around 7mn customers,the majority of whom are between 20 and 45. Tech-savvy younger users are more interested in VPNs, so demographics should provide useful tailwinds. With a forward PE ratio of just 6.1, in part thanks to a hefty fall this year, it seems investors aren't recognising the value available. Buy."
Continued:
"With phishing and social engineering attacks growing in sophistication, consumers are increasingly seeking to obtain more comprehensive cybersecurity coverage across their range of appliances. Moreover, the increase in remote working has made employers more aware of the need for strong digital security across the devices employees use to access company systems at home. These trends are particularly supportive for Kape’s consumer focussed business, leading to both an increase in demand for digital privacy and security protection and a growing willingness from individuals to pay for enhanced services.
Alongside this boost, the company also expects to realise further synergies from the ExpressVPN acquisition, with a figure of US$30.0m annualised synergies pencilled in for next year. Given Kape’s record of success with acquisitions to date, the proceeds from the large fundraise last month are likely to be put to very good use. Continue to buy."
Techinvest's new issue is now out, so it should be OK to post their Buy recommendation and extensive review of the interims from last month's issue:
"Kape Technologies
251p (KAPE; AIM)
Kape has reported a strong performance across the first half ended June 30, underpinned by profitable growth and integration synergies. Revenue was up by 216.6% to US$302.4m, a 19% increase on a pro forma organic basis. Recurring revenues showed particularly strong growth, up by 353.5% to US$59.1m. Most of the growth in recurring revenue was due to the acquisition of ExpressVPN in December 2021. Adjusted EBITDA was up 209.7% to US$88.9m, an increase of 17% on a pro forma basis, with operating profit up 333.8% to US$59.0m. Diluted adjusted earnings per share were 278.9% higher at 34.1 US cents. Adjusted cash flow from operations increased by 517% to US$90.1m.
Kape reported that ongoing demand for privacy and security products continues to drive both new customer growth and upsell opportunities from existing subscribers. The company now has around 7 million paying customers across its products, with the user base mostly consisting of 20-45 year olds, with over 45% from North America
and around 30% located across Europe. Privacy segment revenues grew by 19% on a pro forma organic basis, with the security division growing 15.7%.
Good progress was made in integrating ExpressVPN, the highly earnings accretive
acquisition which significantly scales the group. Unified teams have been created across Kape’s privacy business, with US$9.0m of synergies expected to be realised in 2022. Kape’s content division, based on the Webselenese acquisition, generated significant organic growth, with revenues up 25% on a pro forma basis. For the year
to December 31, the company expects to generate revenues of between US$610-624m and pro forma adjusted EBITDA of between US$166-172m.
Separately, Kape announced that it has raised gross proceeds of US$222.5m through a placing to institutional investors, and an offer to retail investors via the PrimaryBid platform, at a placing price of 265p per share. The fundraise was significantly oversubscribed. Proceeds will be used to enhance Kape’s ability to accelerate growth through acquisitions.
As these results reveal, Kape is experiencing growing demand across the full range of its product suite, reinforced by a premium service offering. Substantial organic growth was achieved alongside the successful integration of ExpressVPN, a
transformational acquisition that has made Kape a leading player in the global digital privacy and security segment."
It's been in a downtrend for a while now any bottom fishers are still sitting on their hands awaiting better economic news. Don't blame them for now but can't help feeling that KAPE is attractive at these levels for those with good nerves and a medium term timescale.