Beeks Financial Cloud Share Discussion Threads

[5chipper] 01/9/2018 11:51

Are the Beeks servers not in the exchange buildings?

There would be, I'd imagine, limited space in these buildings. If Beeks have a network of servers in the main exchange buildings already due to being an early mover then surely this offers something of a moat?


The deeper they can establish their commercial relationships with the exchanges on one hand and the clients on the other hand then the stronger their moat perhaps?

[johnnyoz777] 30/8/2018 10:14

The presentation at Mello Derby was good and Paul makes some very important points. The results are probably mixed but that was said of Amazon a few years ago. One of my concerns is do they have a moat? Do they even have first moved advantage? When questioned on this at Mello Derby the CEO just said "well AWS can buy us if they want to'
What's to stop some/many American tech companies setting up servers really close to the exchanges etc? Please let me know your thoughts as it's a very interesting story.

[ragehammer] 29/8/2018 18:17

I think the EPS has been flattered by £384k (net £366k with amortisation) of capitalised development expenditure. If you were to expense that, as it appears BKS has done in the past, Adjust EPS is only 1.5p and a big miss.

Revenue was quite short of expectations, but grew in H2 about the same level as H1 at about 40% which is really strong and it is obvious that there is significant operational gearing with the expansion in gross margin.

Overall a bit of a mixed bag IMO.

[masurenguy] 29/8/2018 17:01

Paul Scott's view (Paul owns BKS shares)

This is a very interesting company, which floated on AIM in Nov 2017. I'm generally very sceptical about new issues, but made an exception in this case, after a friend recommended that I read the Admission Document. Also, I was very impressed with the CEO's presentation at Mello Derby, and increased my position size from small to medium shortly afterwards.

Results today look terrific to me.
Revenue growth (organic) of 41% - this is a little below forecast, but still highly impressive.
Big rise in gross margin, resulting in gross profit up 90% on last year.
Underlying EPS of 2.27p, giving a PER of just under 38. The main adjustment is for one-off IPO-related costs, which is perfectly reasonable to exclude from the number used to value the business.
Maiden dividend of 0.3p, in line with forecast.
Crypto-currency markets may be providing a short term boost to performance although the narrative says that most revenues are derived from forex and futures markets.
Possible acquisitions have been assessed, but none has met the company's investment criteria. It sounds as if there might be future acquisitions, which would probably result in some dilution. The CEO's dominant shareholding should however protect us from anything reckless or too dilutive being done.

Balance sheet is small, but strong.
No issues there.
Modest Director remuneration, as is often the case with Scottish smaller companies.
Only 821k share options outstanding, which is minimal compared with 50.0m existing shares in issue - good, as it means little dilution in future.
Note that there is a minimal tax charge, so forecasts need to factor in a higher future tax charge. So this flatters EPS at this stage.

Paul's Opinion: This is exactly the type of company that I search for, and want to invest in. It's growing strongly, organically. Not only are sales rising, but gross margins are too, giving fantastic operational leverage. The outlook comments are confident.

How to value it? Personally, I see this as an exceptionally good growth company, hence in a bull market, I'm prepared to push the boat out on valuation. This can be risky, if anything goes wrong, but plenty of lowly valued companies also drop heavily on disappointments, and are arguably more likely to disappoint in the first place. For me, I think this company deserves a premium PER of 50, which based on EPS forecast of 3.6p for the current year, ending 06/2019, suggests a price target of 180p - about double the current share price. Some readers may recoil at paying a PER of 50. However, given that the company has just reported such strong figures, I think it's justified.

There's an update note from a good quality broker today on Research Tree. I think perhaps some investors baulked at the revenue miss, and sold early on today. However, in my view, the more important numbers are gross profit and EPS, which came in ahead of forecast. Indeed the main broker has today increased its 06/2019 EPS forecast.

This share is a reminder that when picking small caps, it's really all about;
Backing top quality management.
A great business model.
Going for a lucrative & perhaps overlooked niche.

Over my sabbatical this summer, I've had lots of thinking time, which has helped me focus more on the above simple 3 points. Short term valuation is less important than the above factors, in my view. So these days I'm more inclined to pass on almost all share ideas. However, for the shares that do meet my rigorous investment criteria, I tend to concentrate my funds into them more heavily than in the past. So when funds permit (am fully invested at present), then I'll be looking to buy the dips with Beeks. As always, this is just my personal opinion, which is not a substitute for readers doing your own research, because sometimes I will be wrong!

[boros10] 29/8/2018 09:57

I calculated the H2 numbers. I generally don't like using EBITDA generally. In the case of Beeks it really is a useless metric given that its business is all about buying hardware (servers), locating them close to exchanges and effectively "leasing" the space on these servers to its customers.

[melody9999] 29/8/2018 08:47

Hi Boros - did you calculate H2 yourself or did I miss them in results?

Below is comment on depreciation - think your point is that the % EBITDA is inflated by ignoring depreciation in that figure, rather than that BKS have ignored depreciation per se??

Cost of sales has increased by 8.3% to £2.6m (2017: £2.4m), largely due to an increase in depreciation of 47.5% to £0.6m (2017: £0.4m). This was due to the significant investment in operational fixed assets during the year.

[boros10] 29/8/2018 08:27

H2 results are very impressive. H2 FY18 Sales up 43% to £3m from £2.1m in H2 FY17H2 FY18 Gross profit of £1.8m. A gross margin of 59% (H1: 46%). H2 Adj. EBIT of £1m (H1 £0.342m). EBIT margin of 33% (H1: 13%).EBITDA margins at 44% in H2, but as providing hardware is it business ignoring depreciation is like a retailer ignoring the cost of the goods sold.

[cheshire man] 29/8/2018 08:02

Market loves it ,,,,,:-)

[5chipper] 29/8/2018 07:44

Interested to know broker forecasts / upgrades

[blondviking] 29/8/2018 07:29

Excellent results

[crazycoops] 24/8/2018 15:18

Full year results next week. Current forecast is £6.2m revs and 2p EPS

[euclid5] 24/8/2018 14:15

Think there is about 5.5m free float in this co, from my calcs

[ragehammer] 23/8/2018 14:49

The CEO still owns over 60% so there is not much free float!

[johnnyoz777] 23/8/2018 11:29

I couldn't get a quote on Hargreaves Lansdown, even just to buy £2000 worth of shares. Are they that tightly held? Had to place fill or kill order...

[cheshire man] 23/8/2018 09:09

Ha you beat me to it Glaws2

[masurenguy] 23/8/2018 09:09

Cheers Glaws2

[glaws2] 23/8/2018 09:02

Here is the text Mas

Beeks Financial Cloud has secured 7000 Virtual Machines and made 80% savings on global data storage using augmented deduplication
Beeks Financial Cloud is a UK-based service provider for Institutional Capital Markets. With nine data centres globally and low-latency connectivity between sites, Beeks Financial Cloud focuses on reducing barriers to entry and time to market for institutional clients trading ForEx/futures and equities. It is at the forefront in cryptocurrency hosting via connectivity to Gemini Exchange in New York, a US digital asset exchange for transactions in Bitcoin (BTC), Ethereum (ETH) and US dollars (USD). Established in 2011, the company's head office and Network Operations Centre are in the UK, with teams in the UK, US, Austria, Indonesia and Japan.

Beeks operates to exacting standards as it provides institutions with bare metal cloud infrastructure and connectivity in the data centres that matter for financial markets, with 100% of its revenue and focus on capital markets clients and consumers. Beeks currently runs nearly 7,000 Virtual Machines (VMs) across its locations.

Most days, core infrastructure items can be depended upon to run smoothly and according to plan - but when things go wrong, you find out whom you can truly rely on, and Beeks recognised it was essential to have a backup solution you can trust. This is all the more important for a high-calibre international company like Beeks Financial Cloud.

FAST-GROWING INFRASTRUCTURE
The company spent considerable time looking for the right VM backup, restore and disaster recovery product to meet its needs. Due to its highly dynamic infrastructure activities and with thousands of virtual machines (VMs) to back up, Beeks wanted a solution that would provide enterprise features and fast reliable support for its VMware environment "without breaking the bank".

Additionally, the selected solution would need to scale up due to Beeks' continually expanding infrastructure, and it had to provide an API. "We used and analysed several products, and none of them were able to fit our requirements," says Markus Seywald, Head of Virtualisation at Beeks. None, that is, until they tried, tested and installed Altaro VM Backup: "Price, management, features and support are key points for us. Most applications cover downtime risks, data loss and optimizations for saving time and money. But for us, Altaro was the clear winner, as they also provide an API and an excellent support team for a low price that is based on servers instead of sockets."

BANKING ON TECH SUPPORT
Now fully installed, the Beeks team is satisfied with its choice of Altaro VM Backup, especially thanks to the sterling support provided by Altaro: "Altaro provides very customer-friendly support. When we had issues or individual challenges, the Altaro team was quick to help us and worked on a solution. They avoided lip service and standard phrases, and focused on the issue. This is important for us, as we think the best application is only half as good if the support team behind it is unwilling or unable to help, or to listen to customer needs."

CONTINUED ROI
Thanks to the install, Beeks today enjoys savings of 81.25% on data storage. This is due to the unique way that Augmented In-line Deduplication within Altaro VM Backup solution is used as a space saving technology that ensures that common blocks of data, across single and multiple VMs globally, are transferred and stored on the backup location once only.

[masurenguy] 23/8/2018 08:57

# post 91 - that link doen't work either.

Your search - www.btc.co.uk/Articles/index.php?mag=Cloud&page=compDetails&link=8926 - did not match any documents.

[fibs] 23/8/2018 08:26

Masurenguy, this should work:

www.btc.co.uk/Articles/index.php?mag=Cloud&page=compDetails&link=8926

[masurenguy] 23/8/2018 00:31

#89 above - that link does not work.

[melody9999] 22/8/2018 17:09

Looks encouraging

Beeks Financial Cloud has secured 7000 Virtual Machines and made 80% savings on global data storage using augmented deduplication:

hxxp://www.btc.co.uk/Articles/index.php?mag=Cloud&page=compDetails&link=8926

[masurenguy] 21/8/2018 09:35

Review of current shareholders here. Four hold almost 75% of the company.

Gordon McArthur 30,296,400: 60.5%
Octopus Investments Ltd: 2,402,700: 4.80%
Anthony Doleman: 2,350,481: 4.70%
Hargreave Hale Ltd: 2,192,302: 4.38%

[3500sr] 17/8/2018 14:11

Article mentioning Beeks in the Times Scotland today

hxxps://www.thetimes.co.uk/edition/business/cities-ride-high-as-unicorns-lead-the-way-6jkl07q9m?CMP=Sprkr-_-Editorial-_-thetimesscot-_-Unspecified-_-TWITTER

[cheshire man] 17/8/2018 11:47

Thanks Masurenguy let's hope they make happy reading :-)