Kape Tech. Share Price (KAPE)

Another useful survey of VPNs from only 3 weeks ago - once again PIA and CyberGhost are mentioned extremely positively in despatches:

Https://www.cloudwards.net/vpn-statistics/

Nice write-up on Forbes, ironically about AVG's VPN, and concluding that AVG's product is only worth 2.5 out of 5, whereas KAPE's PIA gets 4.5 stars and CyberGhost 4 stars.....

Https://www.forbes.com/advisor/business/software/avg-vpn-review/

"Private Internet Access is cheaper than AVG, and it comes with the same number of simultaneous connections. Importantly, PIA also comes with a dedicated IP address option for business-minded users and a much larger server network, giving you options with where you tunnel."

That dude is using a P/E ratio to value one of the fastest growing businesses on the market.

Not a whiff of Cash flow, or DCFs adjusting for intangible assets.

This has the potential to be a cyber monster on a 10 year view (or sooner).

Just fill your boots on down days. Hold forever.

Part two:

"The shares have achieved my 325p target price, having risen by a third in the past three months, and have produced a 555 per cent total return since I included the company in my 2017 Bargain Shares portfolio. However, I feel that a 2022 PE ratio of 13 offers scope for further upside. Not only is the company forecast to deliver 87 per cent and 28 per cent EPS growth in 2021 and 2022, so there is a strong earnings tailwind, but clearly Kape’s management are on the look out for more earnings accretive acquisitions.

I am raising my target price to 375p based on a target 2022 PE ratio of 16.5 and enterprise valuation to cash profit multiple of 13 times. Buy."

Here's Simon's new tip - part one:

"Kape makes strong start to 2021

New US$220m debt facility includes US$90m acquisition facility.
Borrowings expected to be wiped out by end of 2022.
Business adding 25,000 new customers per month.
New product launches and cross-selling initiatives helping to drive up average order values.

Cyber security software provider Kape Technologies (KAPE: 315p) has issued a bullish trading update and announced a new senior secured bank facility on enhanced terms.

Kape is on bang track to deliver 2021 revenues of $197-202m (representing 65 per cent growth) and underlying cash profit of $73-76m (90 per cent growth), in line with guidance at the time of the US$149m earnings accretive acquisition of Webselenese (‘Tap into an eye-catching earnings cycle’, 8 March 2021). Webselenese is an independent digital platform that provides 8.5m users with unbiased insight driven content focused on cyber security and privacy trends that attracts software vendors (McAfee, NortonLifeLock, Dashlane and Kape). Kape has launched multiple cross-company initiatives since making the acquisition which are enabling it to benefit from Webselenese's substantial technology knowhow as well as enhancing the group’s product development and go-to-market capabilities.

Kape’s digital privacy division continues to deliver bumper growth. Since the start of 2021, the business has added 25,000 new customers per month to take the total to 2.61m paying subscribers, with growth rates expected to accelerate. The directors also report that over 12 per cent of new Cyberghost customers and 20 per cent of new Intego users are purchasing more than one product.

New products are helping to drive growth, too. For instance, Kape launched its Privacy First Anti-Virus for PC, which will initially be Intego branded, and in the coming months will be rolled-out to both CyberGhost and Private Internet Access users as part of a wider initiative.

Adoption of Kape’s cyber security software (which protects data security and privacy against piracy and phishing attacks), and virtual private network (VPN) solutions (which encrypt and secure internet connections) have been rising notably in both North America and Europe, regions that account for three-quarters of Kape’s revenue.

The new US$220m debt facility is priced at a keen 2 per cent margin above the applicable reference rate and includes a US$90m acquisition facility. It replaces the existing US$40m term loan and US$120m bridging loan facility that funded the Webselence acquisition. Analysts at Progressive Equity are forecasting 2021 closing net debt of US$77.7m and predict 2022 operating cash flow of US$92.7m will wipe out borrowings by the end of next year. The deleveraging of the balance sheet is important as it means that more of the economic interest in the entity transfers from debt holders to shareholders."