Shearwater Share Discussion Threads

[fillipe] 15/10/2019 08:28

In auction, as I type.

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[nw99] 15/10/2019 08:18

Berenberg 500p target issued in Aug would not have known about the big contract wins so will need to raise their share price target I would imagine . DYR

[nw99] 15/10/2019 08:07

Been here since the start of SWG

[hairballradical] 15/10/2019 08:03

HI Monty and NW99,

good to see you over here too.

[hairballradical] 15/10/2019 08:02

Outlaw, thanks for that info, very helpful digest.

[nw99] 15/10/2019 07:49

The directors have big skin in the game HBR which is always a good sign.

[outlawinvestor] 15/10/2019 06:48

Hi HBR

Great questions. The group is currently made up of 5 companies split into Services and Software divisions. The software division includes Geolang and SecurEnvoy. Services is made up of Brookcourt, Xcina and Pentest.

Geolang and SecurEnvoy build and deploy software products but also offer professional services which includes analysis, consulting and support.

Brookcourt offers cyber surveillance services built on top of their bespoke solutions and infrastructure. It is especially attractive for its current capabilities but also because clients can't trivially switch.

Xcina and Pentest are purely professional service offerings.

As with all tech companies lot of the value is in their people and intellectual property and a lot of investment usually goes into attracting the best talent and building innovative and differentiated technology. Therefore margins might be sometimes constrained but the investment ought to yield larger and more lucrative contracts.

Expertise across the IT security spectrum is a compelling sales strategy, and is attractive to CTOs/CIOs who prefer to buy integrated services from as few vendors as possible.

With respect to intrinsic value, I really can't say too much right now. The group is still relatively young, Pentest was acquired during the current reporting period, Brookcourt and Geolang during the last period so I find it difficult to do much segmental analysis. That said the annual report declares £70m in total assets of which £52m are intangibles (people and IP). Net assets is £49m.
I read somewhere that Berenberg installed a 500p target but I haven't read the report.

I believe the opinions in this post are backed by the last annual report and information in individual company websites. Please advise if you think I've exaggerated or got something wrong.

I found some posts on the other SWG board by Hierarch quite useful. He and other posters are clearly very knowledgeable on the company.

[nw99] 15/10/2019 06:46

Zak Mir Indeed, it would appear that after a slow reaction in the wake of Thursday's news, shares of Shearwater are starting to respond. Indeed, they have pushed towards the main resistance line on the daily chart from May at 198p. An end of day / weekly close this week should be enough to snap the 5 month downtrend in the stock and leave the way open for a rally as high as the main 2019 resistance 300p plus. This could happen as soon as the end of the year, especially while there is no break below the late September peak at 180p.

[montynj] 14/10/2019 19:47

Hairball, I don't think it's on a high valuation , is it ? Price to sales is v v low

[meldrew1] 14/10/2019 18:59

Hierarch
Since I am new to this message board I took the time to back read some of the posts. My my there is some interesting stuff here. Your comments in particular seem very well informed so I assume you must have good contacts.
To answer your questions. Regarding shares I held some for a while but sold out after the Brookcourt and Secarma acquisitions which I personally thought were at too high a premium. Should have had some options on acquisition but let’s say the previous management didn’t come through with those and leave it at that.
Regarding the business I am not qualified to talk about that as I do not know the new SWG management or the Brookcourt/Secarma people. Regarding consulting I would say, because I spent 9 years building a business with him, that Mark was an innovative, hard working and passionate leader of the Consulting business and that will be greatly missed as will his knowledge and contacts. Finding a replacement of his calibre will be hard. That said from an SWG viewpoint the consulting revenue is relatively low compared to the whole.
I think at the end of the day it’s about growing profits and current share price moves are neither here nor there.
What are your views?

[montynj] 14/10/2019 18:37

Hi handball, welcome

[metis20] 14/10/2019 18:34

Current trading and outlook

§ Notably strong financial performance in Q1 2020 - in line with expectations

o Maiden profit on an underlying EBITDA basis

o Strong cash generation - cash balance up 183% from 31 March 2019 to £1.7 million as at 30 June 2019

§ Group positioned for strong growth

o Material number of new customer wins since 31 March 2019

o Strategy yielding multiple cross sell opportunities

o Pursuit of accretive acquisitions, with tangible opportunities for revenue and cost synergies

[hairballradical] 14/10/2019 18:29

Outlaw,

you've tempted me over. Why the high valuation on a loss-maker? Is the business based on the intellectual capability of the team or can this ultimately be done by software? I take it the business model is losely based on that they are consulted to check your systems integrity and if found to be insufficent, they can then also sell you the remedies?

A lot of questions I know and I will get around to reading the board to gen up but anything would be appreciated at this stage (took a quick look at their website earlier).

Thanks

HBR

[metis20] 14/10/2019 17:55

Contracts/ agreements/ awards since start of July -

19 10 10 Shearwater Group plc, the organisational resilience group, announces that its group company, Brookcourt Solutions has secured a three-year contract worth £8.5 million in aggregate with a leading FTSE 100 global telecommunications company.


19 09 17 Shearwater Group plc, the organisational resilience group, announces that its group company, Pentest has secured a one-year contract with a global technology corporation worth in excess of US$1 million. At the same time, Xcina Consulting, another Shearwater group company has also signed a 'Master Consulting Agreement' and become a preferred supplier to the same organisation.


19 08 30 Shearwater Group plc, the organisational resilience group, announces that its group company, SecurEnvoy, has signed a distribution agreement with EMT Distribution, the specialised cyber security software distributor.


19 07 26 Shearwater Group plc, the organisational resilience group, announces that its group company Xcina Consulting has won a multi-year contract to deliver a qualified security assessment of Parkmobile's UK and NL card data environment to ensure that its business is compliant with the Payment Card Industry Data Security Standard ("PCI-DSS").


19 07 22 Shearwater Group plc, the organisational resilience group, announces that its group company Brookcourt Solutions has secured a multi-million pound contract with a leading FTSE 100 global financial institution for the provision of security and cyber security services.


19 07 12 Shearwater Group plc, the organisational resilience group, announces that its group company Brookcourt Solutions has won a contract to supply and deploy cyber security software and services in a multi-year agreement worth £0.5 million in aggregate to Deloitte ES Cyber Risk Services ("Deloitte") covering the EMEA region.


19 07 09 Shearwater Group plc (AIM: SWG, "Shearwater"), the organisational resilience group, announces that four of its portfolio companies (Geolang, Brookcourt Solutions, Pentest and Xcina) have been awarded a place on the G-Cloud 11 framework.

[husbod] 14/10/2019 17:12

Cheers outlawinvestor.If no big buyer then stock must be tight. I certainly wouldn't sell atm.Indeed this is at least a two year hold pour moi unless the unknown unknown happens.

[outlawinvestor] 14/10/2019 17:00

SWG is not SETS traded i.e. no order book. All you will see on L2 are MM quotes.
That said, I can check tomorrow (if I remember) during the MM auctions and see if there are any orders. I don't recall ever seeing any orders during the auctions.

[husbod] 14/10/2019 16:55

Interesting perhaps that it seems to be on the back of a lot of relatively small trades.Still think there might be a big buyer in the background. Anyone got L2?

[outlawinvestor] 14/10/2019 16:35

Wasn't expecting those tick ups at the close! Will be interesting to see how it plays tomorrow.

[husbod] 14/10/2019 16:28

When I said £2 by Halloween in post 1275 I was joking. On that basis Brexit on the 31st is now a certainty.

[husbod] 14/10/2019 15:39

Ye another British tech success gone. Why can't we just build mega companies ourselves.

[nw99] 14/10/2019 15:18

37% bid premium for cyber security specialist Sophos from private equity specialist Thoma Bravo. 32x free cash flow

[husbod] 14/10/2019 13:35

Well any interested party will need to bid soon and at a very substantial premium as the pedigree of our directors means that they (the directors) have every intention of building up a top quality company and they won't be remotely interested in selling imo.

[outlawinvestor] 14/10/2019 13:05

The market is fragmented so one should expect M&A activity and interest from foreign businesses seeking UK expertise and foothold.
Groups like SWG with multi-faceted expertise across cybersecurity/resilience sub domains will either get snapped up or continue growing via accretive acquisitions.

[hierarch] 14/10/2019 12:50

I believe this upwards trajectory in the share price is being supported by the fact that one of the UK’s biggest cyber security firms (Sophos) being bought out for a massive premium announced today. Could be the reason for the higher volume today as more want to get invested into cyber security stocks or transfer their sophos holdings to alternatives such as shearwater, also good to note that avast, is up today too.

[casabella2] 14/10/2019 12:15

This has all the makings of being huge.