Beeks Financial Cloud Share Discussion Threads

[ali47fish] 06/5/2022 16:57

this has now reached the placing offer price- does it still represent a good entry - any comments from savvy investors please!

[tmfmayn] 30/4/2022 19:57

"so well done Maynard, an excellent piece of work, even if I disagree with your conclusion."

Thanks Paul! Will be fascinating to see how Beeks evolves and how the economics of the business shape up during the next few years. If sales get to £125m within your 3-5 years, I suspect you will do extremely well and I will once again rue my lack of foresight!

Best regards, Maynard

[masurenguy] 27/4/2022 07:13

Cannacord Genuity increase their position by over 40%, from 11% to 15.3%.

[p1nkfish] 26/4/2022 12:04

bought for discretionary clients.

[petewy] 25/4/2022 17:16

Lombard Odier Asset Management bought 5%. They are not listed as II's by the FT. Are they new?

[fegger] 25/4/2022 09:58

The Maynard piece on a cake company was not on CAKE but on CBOX

[29palms] 25/4/2022 08:40

Very good write up with bull case for Beeks.

I do wish, however, that such researchers would pay attention to detail.

CEO is Gordon McArthur not "Gordon Mcalpine"

[masurenguy] 24/4/2022 13:48

Interesting analysis DGC10 - thanks for posting the link. I have a few comments having read it.

"Today, 91% of revenue comes from Institutional clients through Beeks’s Private Cloud offering. An expanded product offering Proximity Cloud is purpose built for the Tier 1 space and is gaining traction with Tier 1 clients. Beeks’ now has agreements with nine Tier 1 customers at various stages of deployment. Today 93% of the firm’s revenue is recurring."

This just demonstrates the quality of the Beeks products in terms of client demographics and the 'stickyness' of its service with recurring income exceeding 90%.

"Beeks’ has an established global presence in financial data-centres built up over the last decade. It would be time-consuming and costly for a competitor to replicate this. That said, hyperscalers have deep pockets. In Q1 2021 it is estimated that data center capex led by AWS, Google and Azure was a massive $38bn. The question is at what pace can hyperscalers enter low latency? On the other hand, Beeks might be an attractive acquisition given its established presence and technical expertise. Hence, a trade-sale exit is possible."

This just chimes with my previously posted views that I think there will be a trade sale to a larger synergetic predator in due course and that is what my final exit strategy here is based upon.

"CEO Gordon Mcalpine suggests that on a two year outlook, revenue in the region of £25-30m “doesn’t look too much of a stretch” and they have internal targets higher than this. On £25m sales and assuming an EBITDA margin of 36% (in line with the historic average) we get to £9m EBITDA. Using the average EV/EBITDA multiple of 26x gets you to an Enterprise Value of £234m which would imply a share price in the region of £4.10. Today the shares trade at £1.82."

Based upon this years interim metrics, the full year EBITDA should be circa £5.75m on around £16.8m in sales. A 26 x EBITDA multiple would project an EV of circa £149m and a shareprice in the region of 225p/230p later this year. On that basis, sales could increase to around £25m, with an EBITDA of £9m, by the end of next year. However, I think that an EBITDA multiple of 26 maybe a bit excessive (but not impossible) and I don't know where the author gets a projected price of £4.10 from since with 65m shares now in issue that figure would equate to £3.57. I think he omitted to factor into his equation the 9m shares issued during the recent fundraising. However, a more conservative metric multiple of say 20/21 would result in a shareprice target of circa 280/290p - not an unrealistic figure in my view.

Here is a direct link:

[dgc10] 24/4/2022 10:20

hxxps://dumgoynecap.substack.com/p/bull-case-beeks-financial-cloud-aim

Bull case & deep dive on Beeks here

[paulypilot] 22/4/2022 17:22

Nice thoughtful article from Maynard, he's an excellent analyst, and really puts in the legwork into these articles, very well researched.

I also like the format of putting out bull points and bear points, it's a nice format, and also reveals the writer's leanings!

I think Maynard's bull points didn't properly reflect that a large placing has just been done, at negligible discount (so much appetite), and little dilution (mentioned in passing, lower down the article). So won't need more cash for a while, if at all.

Also, the whole reason this share is exciting to bulls, is the exponential growth underway, evidenced by massive 3x increase in recent order intake, which you won't see from the historic numbers.

Maynard bounces the idea of BKS getting to £125m revenues in 10 years. I wouldn't be interested if that was the case! I reckon this has the potential to get to that level of revenues in maybe 3-5 years. If it's 10 years, forget it!

Divis stopped - doesn't matter, they were trivial. Probably just to get on the divi list for a few instis.

Negative free cashflow - yes, it's a very fast growth company, building infrastructure for many years' recurring revenues.

Capex is 80% growth, 20% replacement (per the company), so replacing the kit is known about, and they've ordered loads early, due to lengthening lead times.

PER - is irrelevant. The company is not being run for profit, it's a rapid growth situation. We can judge it on a PER in a few years, when growth has settled at a lower level. UK companies often miss the big opps, because investors insist on early profits. When demand is this strong, we should back BKS aggressively driving growth. I don't care about short term profits AT ALL.

Unclear economics? Maybe, at this stage, as the company's investing heavily for very rapid growth. Not just capex, but big increases in staff, to take advantage of a unique opportunity. If you're sceptical about this, then BKS is definitely not a share for you. No argument there.

It's expensive based on historic figures - absolutely. Agreed. I'm not buying the past, I'm buying the future. Find me other companies that are growing recurring revenues exponentially, as I'd love to see them.

Overall - I have a lot of respect for Maynard, and his piece on CAKE was brilliant - flagging up the smoking gun - an auditor resignation letter which slammed management, that the market didn't seem to notice (as it was not RNS'd).

In the case of Beeks, there is nothing in Maynard's article which I didn't already know. So no smoking gun, and perfectly rational discussion of facts & figures, with bull & bear case well explained.

Obviously I'm a lot more bullish than Maynard, as I think the rapid acceleration in contracted orders is what makes this share so exciting.
But it's really great to have a rational bull:bear discussion, so well done Maynard, an excellent piece of work, even if I disagree with your conclusion.

Best wishes, Paul.

[hatfullofsky] 22/4/2022 13:43

Thanks for the post, is this the same guy that took down CAKE ?I feel there is a fundamental flaw in his analysis : He is valuing BKS as a mature business rather than and business in the growth and investment phase, this is not linear but more exponential.

[masurenguy] 22/4/2022 13:11

Yes, an excellent analysis by Maynard Paton. Obviously, everyone will draw their own conclusions on the BKS forward valuation metrics and growth potential. The view that I expressed six months ago, after top slicing my holding @198p, was as follows.

Masurenguy 1 Oct '21 - 173: Over the past couple of days I have reduced my shareholding by 35%, to recover more than my entire investment here. The price has almost doubled in the past 8 weeks and has probably run ahead of itself on both PER and P/S ratios. The balance of 65% that I still retain constitutes pure profit which I plan to keep invested here on a longer term basis.

Contemporay valuations will fluctuate with a niche small cap tech share like this and therefore timing and price are critical to any investment decision. The 20% drop to 184p over the past 2 days is still circa 11% above the fundraising price of 165p a couple of weeks ago. I still view this as an excellent long term hold with a very good chance that it will be acquired by a predator in due course at a premium to whatever the shareprice was if, and when, a bid is announced. GLA.

[saltraider] 22/4/2022 13:09

Yes ... very interesting analysis. It is good to see the bull and bear cases side by side.

My view is that Beeks is in the process of unlocking significant future economies of scale (reflected in high investment in 'infrastructure' assets and increased staffing costs to open up new business). When the benefits of that come through, I think the performance metrics will improve markedly. Beeks' business model and its developing customer base mean that revenue gains should be sticky with strong growth potential from existing customers and modest levels of customer 'churn'.

The strongest positive, I think, is Gordon McArthur's truly frugal salary and benefits. He clearly believes that leaving money inside the business is the way to maximise long-term shareholder value ... and he is keeping himself massively exposed to that.

I hold ... DYOR.

[johndoe23] 22/4/2022 12:53

Thanks, will give it a read

[74tom] 22/4/2022 12:45

This is the reason for the rejection of the 200p level;

A brilliant read I have to say.

[johndoe23] 22/4/2022 12:38

Couldn't break resistance at 210p. Be interesting to see where this settles...

[masurenguy] 19/4/2022 08:07

Shareprice closed at an ATH last week and continue to rise this morning with the first buys above 206p. 😊

[hatfullofsky] 12/4/2022 13:58

Needs to push through 200 it has failed to go so on 29/09, 19/10, 16/11, 17/01.If it does it could form a new base. Now fully funded, with orders rolling in this becomes a very attractive investment.

[the monkster] 11/4/2022 21:58

with insiders buying in advance you mean ??

[freemo7] 11/4/2022 17:26

Anyone else thinking there is going to be a massive contract announced imminently?

[29palms] 11/4/2022 12:01

SP showing 9 tick ups so far today after £15m fund raise.

Coffee Can share for sure.

[matthew palmer] 09/4/2022 13:05

Anyone on TECHINVEST, I am wanting to form a group of similar minded people to discuss its views etc and information.

Click my name and send a message.

[tomps2] 08/4/2022 10:05

Stockopedia/PIWORLD StockSlam - April 2022

Paul Scott ‘slams’ Beeks Financial Cloud (BKS) in the latest PIWORLD/Stockopedia StockSlam at 45m17s

Watch the video here: www.piworld.co.uk/education-videos/stockopedia-piworld-stockslam-april-2022/

Or listen to the podcast here: piworld.podbean.com/e/stockopediapiworld-stockslam-april-2022/

[darrenp746] 05/4/2022 18:18

If you’re wondering how many extras you may get from the offer, I Got 84.15% of the extras that I applied for via PrimaryBid

[29palms] 05/4/2022 08:25

The £2.20 target price that analysts at Canaccord Genuity put on the share price back on 21st March is on the horizon after this oversubscribed cash raise @ £1.65.

A "Coffee Can" share for sure.