Riverfort Global Opportu... Share Discussion Threads

[the prophet] 23/11/2006 17:42

-lets call it £3 target, with the de-merger of 2safeguard happeing in the next few months, we could get there quite quickly!

-v.nice late afternoon move....I think we are now at an all time high, so looks like a breakout?!!

[ltinvestor] 23/11/2006 17:11

Spangle.It was the "morning call " yesterday after the results.

[spangle93] 23/11/2006 16:45

ITinvestor - is that Numis upgrade available anywhere on the web - I haven't seen any reference to it on the sites I use?

[nurdin] 23/11/2006 16:15

you guys can sit there and deramp at your hearts content..the share price will speak for itself :o)

[pomp circumstance] 23/11/2006 14:56

i rememember NUMIS having a 594p target for earthport!!!!

[ltinvestor] 23/11/2006 14:37

Numis upgrade to "BUY" with a £2.98 target.

[leighbarton] 22/11/2006 18:14

I agree I think the technology in 2Safeguard is being over hyped - however not that long to wait and see.

[pomp circumstance] 22/11/2006 17:27

bit old hat that aint it!!

Weve been using that type of this for online banking in Holland for a few years!!!

[nurdin] 22/11/2006 17:24

Simon thank you for that...an excellent write up

[simon gordon] 22/11/2006 16:59

From Market Forces in the Guardian:

Strong annual results from text messaging to mobile video services group 2ergo helped shares in the company gain 9p to 229.5p but market watchers were more interested in the group's announcement that it is going to spin out what some believe could be its most valuable asset.

The company has been developing a technology platform called 2safeguard which it reckons will provide the entire mobile industry with a new protocol to deliver secure payments and communications - making mobile commerce more secure than the existing credit card chip and PIN system. As Neale Graham, joint managing director, says: "We think it is the Holy Grail in terms of mobile commerce".

Alongside potentially turning absolutely any mobile phone on absolutely any mobile network into the equivalent of a secure credit card, 2safeguard could be used by banks worried about online banking fraud.

Several High Street banks are already testing something called two-factor digital authentication. Rather than relying on just a username and password to access an online account, some banks have been seeking to supply customers with devices that produce single use security codes. These codes must be entered alongside a customer's username and password - hence 'two-factor authentication'. Such devices - typically a keyring-sized LCD display that shows a series of regularly changing numbers - are widely used by companies that grant employees access to their secure office network while on the road.

It is understood that 2safeguard is in talks with a number of banks about using mobile phones instead of keyrings to supply these codes.

The exact details of the demerger - slated for early next year - will not be out for a couple of weeks but 2ergo and its existing shareholders will retain a majority stake in the business. There is also likely to be a secondary fund raising.

Perhaps most intriguing will be the valution that is placed on 2safeguard. The business has not been included in the City's estimates as its technology has been in the development stages. As Teather & Greenwood pointed out in a note: "This product has the potential to be transformational for 2ergo, yet because it was still in the development stages we had not yet been able to place a valuation on the product. A listing would inevitably force a valuation."

[wjccghcc] 22/11/2006 11:09

You're right prophet, it is the link to the 8th september report even though it says 20th september in the header. Sorry.

[the prophet] 22/11/2006 11:03

-link for T&G report is also in this header

[nurdin] 22/11/2006 10:36

Thanks WJC...will have a look.

[wjccghcc] 22/11/2006 10:23

Not a software company nurdin. They usually charge on a per transaction basis or fixed fee basis. There's some very detailed research from T&G (the 8th september one) on their website www.2ergo.com in the investor relations section which is worth reading for a good overview of how the business works.

[leighbarton] 22/11/2006 10:10

V impressive, this company continues from strength to strength and somehow has avoided the woes that beset some of its competitors (SEA, as was and WNN). Still, even with WNN woes their numbers are actually ahead of RGOs so does make you wonder whether there is not more value to be had there.

Re 2Safeguard, my understanding is that one of the reasons for the demerger is to free it to sell to RGO's competitors. Difficult to judge its potential without more details, but I don't think we have an ARM here. Payment solutions of various descriptions have been touted in the mobile industry for many years, some by entrepreneurial start-ups, some by some of the major players. They all have one thing in common, none as of yet have got off the ground and have found a way of supplanting premium SMS as a payment mechanism.

2Safeguard is different in that it is more about encryption than payment itself, but evenso it shows the difficulty of getting this type of technology off the ground, and the real question is how unique is the offering, I know a number of their competitors claim to have encryption capability on their systems. I also would be interested to see the commercial model - if it based on transactions then they could see margins squeezed immediately before they have a chance to build volume.

Still I can understand why they would want to de-merge to try to separate value on a product that if it does gain traction could be v interesting.

Still out of the sector, but time could be fast approaching to get back in - the question is though with which company.

[nurdin] 22/11/2006 09:50

The only question I have relates to their gross margins..at 20% they look way too low for a software licensing compnay(I am assuming they license their software).I wonder if they are striking R&D expenditure at the gross profit level?

[the prophet] 22/11/2006 09:41

-the T&G report (link in the header) gave forecast eps for this current financial year as 8.95p, with 11.76p for the following year ( ie year starting 1st Sept 07)
-given that RGO have just done next years forecast already, with adjusted basic earnings per share of 8.82p eps , then I think some hefty upgrades are in order.

-perhaps the 11.76p could be do-able for this year? In which case we are sitting on a forward p/e of around 20, for 25%+ growth.....that looks reasonable in itself, but chuck in the near-term de-merger of 2 safeguard and it looks a very attractive situation, with good potential for near term as well as longer term share price uplift.

-all imo and dyor!

-edit, should make clear that the header has the 'old' T&G report
-also that I have no idea what level they will upgrade to, just my estimates! Guess brokers will probably go for something a little more conservative. But given RGO's history in beating forecasts, don't think my scenario is too unlikely!

[ltinvestor] 22/11/2006 09:38

I believe that Teather and Greenwood have put out an upgrade this morning but I do not have the details.

[nurdin] 22/11/2006 09:29

The key question is, what value do they attach to 2Safeguard? If the potential is as great as I assume it is, then £25-£30m wouldnt be too far fetched imo..and if that is the case then RGO look way way too cheap.Guess we will have to just wait and see

[wjccghcc] 22/11/2006 09:25

The most likely reason they're demerging it is because if 2safeguard is to fulfill its potential and become the mobile payment method of choice, then it will have to be adopted by 2ergo's competitors and they won't do that while it's part of 2ergo.

[ltinvestor] 22/11/2006 09:09

>No doubt details will emerge over the next few weeks and I am pretty certain that an EGM will be held to vote on the demerger etc.

[the prophet] 22/11/2006 08:50

-excellent set of results

-only question I have is how exactly do RGO plan to benefit from the great potential that 2 Sageguard has? I note that they are floating it as a seperarate company and intend to retain 'a minority stake'. That indicates that they are selling the majority of it, which surprises me if they see great potential?.......I would have thought they would have wanted to retain as much as possible, raised cash for the seperate entity and partaken of any uplift in value.
-any thoughts?

-edit
-I guess issuing the shares in 2safeguard to RGO shareholders and RGO retaining a modest stake achieves the above.

[21richyrich] 22/11/2006 08:46

It - I agree with you about ARM If I recall Acorn Computers went from 3p to over a £ within a short time period - and that was just the start as ARM multipled many times over from demerger price

Doubt we will see quite the same price action, as RGO already established co on reasonable rating but even 10% of Arm increase would be vv nice - guess all depends on how essential to the mobile space 2safeguard is and the chances of it becoming the defacto security solution for mobile purchases, from the noises made previously the company certainly is optimistic it has a winner on its hands

Guess also depends on the market appetite at demerger, if growth stocks are coming back into fashion and the market likes the growth story then obviously a higher rating can be achieved

Hopefully can learn from history and get in before the re rating takes place this time!!

Hence purchase initial 2000 this am

[nurdin] 22/11/2006 08:41

what a churlish reaction to excellent results...and plans to extract value from 2safeguard...mad

[nurdin] 22/11/2006 07:58

More significantly 2safeguard will be demerged early in 2007...that makes RGO even cheaper