Kape Technologies Share Discussion Threads

[rivaldo] 28/7/2022 10:32

There's been three analyst research reports published since the excellent H1 trading update, but only the Singer report with the 405p valuation has been mentioned here via the Master Investor summary.

Singer forecast $170.8m EBITDA and 39.2c EPS this year, but with $88.5m EBITDA in H1 alone KAPE should easily beat that number.

Shore Capital go for $169m EBITDA and 40.6c EPS. They say the valuation looks "extremely modest", "EPS risk is low" and "the underlying growth story robust".

Progressive Equity go for $167.7m EBITA and 39.1c EPS, so once again these figures look easily beatable. They conclude:



"This trading update demonstrates the growth and resilience of the privacy and security markets, the fundamental strategic logic of both the ExpressVPN and Webselenese acquisitions, and the management team’s ability to deliver. We believe there is much further to go with Kape, both in terms of its scale and the market’s appreciation of the quality of management and earnings."

[suetballs] 26/7/2022 15:18

Will the the cost of living overly impact subscribers?
Another indifferent day here - but I suppose the market mood is not one of optimism.
Suet

[rivaldo] 21/7/2022 08:36

Cheers Tole, I'm holding both CNIC and KAPE and both look to have terrific upside.

I assume the 690p is a typo for 490p. Mind you, with around 37p EPS forecast for next year 690p would represent a P/E of 18.6, which is still a pretty low multiple for KAPE's sector. Let alone a P/E of 7.9 at the current 295p....

[weatherman] 20/7/2022 21:17

Surely, it went to about 490p last year - not 690p.

[gswredland] 20/7/2022 17:36

Thanks Tole.
Also have big holdings in this and CNIC

[tole] 20/7/2022 15:17

https://masterinvestor.co.uk/equities/the-internet-continues-to-offer-accelerating-growth-for-centralnic-and-kape-technologies/Kape Technologies – the good news keeps on comingYesterday 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% ARRThe 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 viewCaspar 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 ViewI 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.

[rivaldo] 20/7/2022 11:28

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 I agree with Adam above - KAPE should be heading towards 500p-600p ceteris paribus (that's one for Latin lovers).

[adamb1978] 19/7/2022 08:03

Hi Rimau

De-rating not justifiable at all however its a wider mid/small cap thing rather than just KAPE. That said, I think that having the full interims released such that people can see the EBITDA generation alongside the leverage will help too though. Think 500p-600p is not an unreasonable expectation for this within 24 months as EPS heads north of 30p in FY24 and assuming some normal market conditions

Adam

[igoe104] 19/7/2022 08:02

82% reoccurring revenves and the company has a track record of always delivering. So why the sharp fall ?

[basem1] 19/7/2022 07:56

I expected the sellers to stop at 295/300 ish but they kept on going Crazy entry below £3

[igoe104] 19/7/2022 07:53

Yep, Fantastic update. Totally unnecessary markdown, by paranoid investors...

[basem1] 19/7/2022 07:35

That is a relief after buying yesterday I could not help but think there was a negative coming when I read the TU line by line. Not earth shattering but the sell off has been overdone for sure.

[rimau1] 19/7/2022 07:23

Excellent trading update, in-line with the June AGM statement. Maybe the market was expecting a slowdown but the de-rating is not justifiable IMO, similar to CNIC yesterday. PE is single digits, FCF in excess of $100m pa and a strong structural growth story with a USD tailwind. What is the bear case other than external macro? Debt is not excessive especially with FCF. I continue to add under £3!

[igoe104] 18/7/2022 11:21

Fancy a Nasdaq move in 2024, when the markets are positive. We will be selling our shares to the yanks for the equivalent of £10 a share...

[gswredland] 18/7/2022 11:18

Good on you base
2 yrs out from here(and possibly a lot less!) you will be laughing!

[basem1] 18/7/2022 10:21

From early 2021

[basem1] 18/7/2022 09:59

I could not resist and have bought some There is a tiny flicker of a support level on the chart.

[blackfinance] 13/7/2022 13:22

igoe104 - Thanks for the link, just looked at it, he speaks well and seems very confident of his numbers, could just be a shake out prior to the trading update. I must admit I'm very tempted at £2.75.

[gswredland] 13/7/2022 12:18

Roll on the TU!

[suetballs] 13/7/2022 11:48

Slightly nervous of bad / indifferent news tbh - watched a number of my holdings get hammered recently.
Suet

[blackfinance] 13/7/2022 11:43

I've got quite a large holding already so happy to keep that and not add for now. It is tempting but it could also go lower. I would definitely want to see a bit of strength or at least levelling out before buying anymore.

[basem1] 13/7/2022 11:27

As tempting as it is to buy below 285 lol

[bulltradept] 13/7/2022 11:22

Yes fair comments. Let's wait until next week then!

[basem1] 13/7/2022 11:20

Should be a TU next week given that we had one on 20th July last year