The group’s growth strategy is a combination of organic growth via continued product development and selective acquisitions. The company plans to continue investing across the business with a key emphasis on mobile and e-commerce solutions to capitalise on digital transformation trends in retail, wholesale distribution and logistics. While the ongoing Brexit negotiations could lead to some uncertainty, the management is not overly concerned given the positive feedback from Sanderson customers and the healthy order book and balance sheet. We maintain our earnings estimates, currently not incorporating the company’s updated three-year plan. However, integrating longer-term financial targets, the fair value per share derived by DCF and DDM valuation implies 10-20% upside from the current share price in our view.Full report is available via Capital Network website
Proactis Holdings Plc (LON:PHD) is a provider of software for Spend Control and eProcurement, systems which are used by most large organisations to manage the way they transact with their supplier base. In recent years Proactis Holdings Plc (LON:PHD) has been gaining market share, within a growing market, delivering a 35% CAGR in revenues, and 62% in EPS.
YEAR-TO-DATE PROGRESSING STRONGLY
Corero Network Security Plc (LON:CNS) H1 results release (14/092017) showed strong progress, with revenue up 51% for the flagship SmartWall product. Perhaps even more importantly the recurring revenue element for SmartWall was up 177%. This reinforces the growth profile going forward because licence fee income grows cumulatively as new customers are added.
We believe these results demonstrate that the company has essentially completed its transition from a software generalist to a DDoS protection specialist, and that the SmartWall DDoS protection product continues rapidly gaining traction in the market.
In this report we review the progress of the group. We also revisit some of the fundamental drivers, and how the DDoS protection market functions. We argue that SmartWall’s real-time threat mitigation represents a disruptive new presence in the space.
KEY INVESTMENT THEMES
Among the main attractions of Corero Network Security Plc (LON:CNS) as an investment:
• A highly differentiated product in SmartWall which offers game-changing performance compared with anything else in the market place. • Substantial headroom for further market share gains, within a continuously growing end market for DDoS protection. • An expanding range of channels to market, and technology partners including Juniper Networks, Gigamon, and McAfee to extend Corero Network Security Plc (LON:CNS) market reach. • Support of a shareholder base that includes specialist institutions such as Miton and Herald Investment Management, and also the Chairman and principal shareholder Jens Montanana.
In this report we examine some of these themes in more detail.
The shares have gained 81% since the successful fund raising in April. Still, looking forward we believe the company could reach revenues of $50m in 3-5 years. This would imply a market cap of £115m based on peer-group multiples (e.g. Radware, RDWR:NSQ), with no further fundraising required in our view, or 4x upside from the current level. If Corero continues to deliver on milestones, there is still everything to play for here for investors.
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