Shearwater Share Discussion Threads

[channel pirate] 07/5/2020 19:26

I have been adding in dribs and drabs rather than making one bigger purchase and paying too much.

G.L.A.

[cheekyfella] 07/5/2020 19:04

Look at the bigger picture.When the market pulls back (soon) SWG will make the first of several strategic acquisitions.Really don't understand the need on here for short termism and bickering.Buy the dips, by December 2021 when the pandemic is a memory SWG will be nudging £5.

[hierarch] 07/5/2020 18:36

The constant losses from the purchase of loss making entities however necessary and investments in product development have pushed the financials down to a level which makes the company look on paper terrible but in reality significantly more able to pursue the model I've talked about.

I know NCC isn't a software reseller with its escrow but it is a seller of integration and IT consulting services which is what I meant and should have clarified.

[2lb] 07/5/2020 15:23

Hierarch - if we follow your logic and numbers (which I think is flawed, but let's go with it) then even you must accept that what SWG has magically produced is a scenario where the whole is materially less than the sum of the parts in EBITDA and PE ratio respects , a very neat trick when the very vocal strategy is to do exactly the opposite.

PS - NCC isn't a reseller.

[husbod] 07/5/2020 12:42

Spread is 235-245 and just bought a modest amount at 239.8 which means that most of the deals shown on the ADVFN computer are in fact buys which explains today's small rise.Anyone got L2 on this bb and if so is there one rogue mm on 235?

[husbod] 07/5/2020 12:28

Keep posting your analysis Hierarch as it is certainly useful to me given my very basic understanding of technology.Tolerance though is also a virtue and this has been a pretty civilised board so far. I'm going now to tuck a few more away in anticipation of a positive acquisition RNS shortly.

[hierarch] 07/5/2020 11:16

earwacks Us

[earwacks] 07/5/2020 11:04

Hierarch.Unlike you I don't have anything to get over. You sound like you need help. Good luck

[hierarch] 07/5/2020 10:50

Not At all

[hierarch] 07/5/2020 10:25

You are making misleading statements and have gone head first into a BB shouting about how entitled you are to a more extensive update because what you read wasn't satisfying enough for you. Then blaming the company for an update which delivered exactly what they can at this point consistent with other similar companies.

Then telling me I should re read it after explaining exactly why this is all they can and usually give at this point? Of course someone is going to pick you up on the way you've come at the BB like that.

[earwacks] 07/5/2020 10:09

Hierarchy. I think you can deduce from the placing update and the subsequent share price that its left the market confused never mind posters. Normally I would expect a title of rns should be placing and trading update. If thats what it is. All I said about the mobile app was that it was a promising joint venture. Which is what it is. I understand it is currently being trialed, I never mentioned anything about monetising. Why so hostile have you some kind of superiority complex? Absolutely no need to be so rude and condescending.

[hierarch] 07/5/2020 09:55

2LB out of respect that you seem genuinely concerned with the business despite your tendency to provide a very negative analysis on the groups exploits I want to touch on your comments about the acquisitions and give you my take. As I really cant understand where you are coming from:

They have not overpaid for their acquisitions, they paid an average PE ratio of 10 for SE and BC and the loss making entities where purchased for a consistent value to other market transactions bar one. XC (Newable Consulting) revenues doubling every year although when acquired it was loss making at £0.08m, it is now profitable, bought for £0.6m, pbt estimate of £0.2m this FY puts that acquisition on a 2021 PE ratio of 3!

Geolang (£1.7m) was for a very strong patent which can only be seen as fair value if you understand the strength of the DLP/DD patent for future security requirements and the value of DR Debbie Garside now Chief innovation scientist for the group brings.

Crystal IT (50K cost) was overpaid for due to stupidly high operating cost - but now written off - Pentest overpaid for as part settlement to a court case (much better than settling it with cash and a whitewash on Xcina! - I understand 2LB that 2 acquisitions where overpaid for - 1 a mistake but only £50k and an unfortunate years loss anyway and the other not by choice but by court settlement. In addition the original owners of each respective acquisition all took shares for an average of 50% of the total consideration. Industry veterans would not have accepted any shares if they where of the opinion they sold their business over tangible value they would have asked entirely for cash as is within their discretion as the seller!

BC = £3.2M 2020 PBT, acquisition cost £30m, PE ratio Less than 10!
SE = £2.2m 2017 PBT (year of acquisition) acquisition cost £20m, PE ratio Less than 10!
Yes SE have been earning less for the last few FY's in PBT terms but revenue has increased 10%+ per year with ongoing investments designed to futureproof their MFA solution - it is now the only MFA provider with a built in DLP/DD function from Geoloangs patent with the addition of IRAD, CASB and hybrid cloud capability. There are other future proofing tech patents which are pending for ready to transform SE from the generic albeit high margin MFA provider it was in 2017 to a market leader with patent protected software. The profit has been hit massively by these investments but if you understand the offering it will pay off and SE will more than likely accelerate in market traction globally with high margins being restored when they have completed their vigorous product development phase which should be soon and more importantly provide them with a MOAT over other MFA solutions.

To conclude to showcase the opportunity for SWG's new approach in this BB:

The current business is a great setup. You have the strength of the brookcourt platform which provides bespoke subscription based recurring offerings with access to relationships with to the worlds biggest banks, Uk's biggest telecoms, FTSE350, fortune500 and global large cap constituents. They then have a strong portfolio of in-house expertise with XC and pentest with a complimentary critical software component within SE/Geolang all of which have outstanding cross-selling opportunity due to their ability to cover a wide range of security vulnerabilities as a package.

This company is like Computacenter except when SWG attains that kind of scale or even a fraction of it - SWG's margins will be exceptionally higher because SWG wont mainly be reselling software packages from third parties or hardware (Computacenter don't own a great deal of in-house patented software, mainly security consultants, hardware distribution and cloud integration), SWG will be reselling software and services within its own portfolio hence massively expanding margins. Reselling margins are skinny, but not when you are reselling your own IP and not when they are subscription based and recurring. If you control the third party software, you control the pricing and hence SWG can make their propositions much cheaper than a competitor reselling a security proposition package they don't mostly own. What happens if the third party software provider puts the prices up for computacenter? it gets passed onto the end customer as the margins are too skinny to absorb. SWG can set the price of its software and have a fully integrated approach to cyber security - that is the goal for SWG in my belief. To acquire strong patent protected and complimentary software and service offerings to expand the scope of the SWG platform that can be delivered as a combined warhead via brookcourts extensive and growing list of lucrative business relationships. One proposition, one managed subscription service and one point of contact is what customers want for their cyber security needs - SWG is here rapidly building a bespoke offering for that purpose in a different way to your typical reseller like computacenter, softcat or NCC.

I can understand why some long-term shareholders are negative, having bought at the early highs but this company has now found its direction and its trajectory should start heading the right way at this inflection point. Phil Higgins and the board will not let this company down not with such a high interest in its equity. Im sure the value proposition will expand overtime - I have confidence we have the platform for growth now established. Lets hope the next acquisition brings more complimentary and highly accretive offerings to our table.

[hierarch] 07/5/2020 09:48

Are you are being daft or just trolls?

A more extensive update - we got one. Its there in the placing RNS for all to see and if you compare to the initial update on 2nd April it is as they say a more extensive update. Not only is it more extensive on the financial details but is a more extensive elaboration of the results to go with it. This level of detail is COMPLETLEY consistent with the level of detail many other AIM companies of similar mcap can provide only 1 month after the end of the FY. This more extensive update is also completely consistent with the more extensive updates this company has given for the last 3 previous FY's after only 1 month upon end of each respective FY - if you where LTH or even bothered to look back through previous RNS (more than the last year) you would understand this and have known what to expect!

You guys do not understand the accounting timelines of junior AIM listed companies. Their accounts will not even be fully audited yet - a responsible company would never give a full update based upon unaudited accounts!!

Clearly you are not experienced in how extensive almost every AIM listed junior is on financial disclosures after ONLY 1 month after FY end.

Earwacks the point that you even thought that SWG was in a joint venture to make a Covid-19 app tells me your not properly researched here, you have no idea what you read even means. Covid19 App hahaha you will come back saying SWG will be making a vaccine next after reading more on the company!

I can only come to the conclusion that you two are trolls, have an agenda and are about to nail this BB with a wave of negativity and misleading info. Id recommend filtering them both now they've shown their colours.

[husbod] 06/5/2020 23:03

Looking at all those sells of 10k, the 2 of 67,750ish and the 7ks or thereabouts plus all those 5k sells yesterday strongly suggest a big seller who will need to be cleared before the share price can move northwards.

[northwards] 06/5/2020 22:45

Hierarchy, the trading update in the placing RNS said pretty much nothing new. Perhaps you should re-read it.

[furgus ferret] 06/5/2020 22:29

Hierarch

Perhaps you need new glasses or an education update.

This is from the RNS dated April 2nd. Read it please. Then read it again. Just in case you cannot :

David Williams, Chairman of Shearwater, commented:

"With all the current uncertainty, we thought that we would update our loyal shareholders as to the progress the Group has made over the prior 12 months as quickly as possible after the year end, before a more extensive update later in April.

Then, when it came on April 24th, there was no 'more extensive update'. Just a proposed placing RNS. Hardly the same thing.

Of course I read the Placing RNS. Very flat as regards recent business performance. What about Contract Wins, new Business, forward Prospects and other things that matter to shareholders ?

[hierarch] 06/5/2020 19:29

The trading update can be found on the RNS titled "proposed placing" why don't you read through it - the level of detail given with the update is consistent with the amount of info able to be provided by a small AIM company based on unaudited accounts for this less than a whole month after the end of the FY? Looks like neither of the two previous posters have bothered to examine the detailed RNS properly which very clearly indicated what they are going to use the placing proceeds for. Im not going to repeat what the placing proceeds nor what the trading update entailed as I'm going to hope that the last two posters are capable of reading and knowing where to find the respective RNS.

Earwacks - the company are not developing a COVID19 app as a joint venture - they simply performed a charitable service to the developers of the "JoinZoe" app by pentesting it for free as a good gesture. No monetisation ect, just charity which is a great contribution towards doing their bit.

[furgus ferret] 06/5/2020 17:17

We were promised a Trading Update at the end of April but it said nothing new at all. The PR has always been poor with this company but it seems to be getting worse.

Almost as though shareholders are an irritation. Management need to tread the boards of some of the investor relations forums and get the message out there.

Will they ever learn what a small company needs to do to gain a profile ? Paying expensive London PR outfits is not the way

[earwacks] 05/5/2020 15:11

Good idea. Sp always drifts when you tell the market end of April for full update and then don't deliver. Should be good if they can substantiate a bit more on what the placing was for. Should'nt have really taken more than 30p off the share price @£2.90. The Covid19 mobile app joint venture sounds promising:David Williams, Chairman of Shearwater, commented:
“With all the current uncertainty, we thought that we would update our loyal shareholders as to the progress the Group has made over the prior 12 months as quickly as possible after the year end, before a more extensive update later in April.
“Thanks to the efforts of our highly experienced team, we have been able to produce an impressive result with a substantial swing from an EBITDA loss to profit and notably strong cash generation.

[channel pirate] 05/5/2020 14:30

Just added 500 shares into my ISA @ 241.8954p.

[husbod] 01/5/2020 16:02

Thanks cp - still plenty of upside and anyway much depends on the quality and price paid for the acquisitions which can't realistically be priced in at this stage.

[channel pirate] 01/5/2020 15:38

Broker Recommendations for Shearwater (SWG)


Date 01st May 2020.

Broker: Berenberg

Rating

Old Target : 24-Oct-19 Berenberg Bank Buy - 500.00 Reiteration

Change:

New Target : 01-May-20 Berenberg Bank Buy - 400.00 Reiteration

[mfhmfh] 01/5/2020 09:18

I agree...all seem buys to me.

[channel pirate] 01/5/2020 08:55

All these "RED" sells around the 246p price I think you will find they are "BUYS" as I added more at 246.00p albeit they are not showing.