Kape Technologies (KAPE) H1 20 results presentation

16th Sep '20 by TamzinPiworld

5 comments 689 reads

Ido Erlichman, CEO & Moran Laufer, CFO present H1 20 results to analysts, followed by Q&A, 15 September 2020.

Ido Erlichman, CEO
Investment summary – 00:42

Ido Erlichman, CEO & Moran Laufer, CFO
Financial & operational highlights – 02:06

Ido Erlichman, CEO
Data privacy market – 05:09
Covid-19 – 06:31

Moran Laufer, CFO
Financial overview – 10:47

Ido Erlichman, CEO
Revenue model – 15:48
Marketing – 19:29
Customer service – 21:04
Integration of PIA & Kape – 22:26
Ongoing priorities & outlook – 23:50

Q&A – 25:54

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About the Author

TamzinPiworld

Premium Member

An active private investor in small caps: growth/value. Co-Founder of piworld.co.uk which provides videos of company presentations, management interviews, investor interviews & webinars, to enable investors to make informed decisions.

5 comments

Simon Rowan

25th Oct '20

Yet again I am at a complete loss about the ranking score on this company by stockopedia. Its the kind of momentum trap I like £1.50-£2.20!

Gromley

25th Oct '20

Interesting point Simon,

There are though a couple of things to think about wrt the SR.

Firstly, they are based on statistical averages - they should not be taken to mean that every stock with a low rank is a dog nor that every stock with a high rank is a star. If you can understand the reasons for a low rank and confidently dismiss each and every reason, then you are probably on to a good thing.

Secondly the Ranks do not handle major events like acquisitions well, so the Rank will not "normalise" until the dust has settled. In the case of Kape Technologies (LON:KAPE) - the increase in share count and debt as a result of the acquisition are currently in the numbers, but all of the measures that rely on past performance (especially the Value Rank elements & the F-Score element of quality) do not yet show the benefits of the acquisition.

More specifically in this case.

I would just say though that I am personally still quite sceptical of Kape Technologies (LON:KAPE) . They only recently moved into profit and excluding the acquisition their earnings multiple was still huge.

I think the key upside potential for Kape Technologies (LON:KAPE) is that they managed to acquire a successful tech stock from the United States at a bargain basement price.

"If it seems too good to be true it probably is" is a phrase that keeps coming in to my mind.

Especially in the context of an Israeli company with dubious past, controlled by a convicted fraudster.

I am not calling out Kape as a short (I have owned and lost that particular T-shirt to be perfectly honest).

But with so many other investment opportunities available on the market, the only reason I could see to invest here is FOMO. It has risks that I just do not need to take, so if I do miss out that is fine.

Just my view and perhaps food for thought - obvs no advice intended.

Simon Rowan

25th Oct '20

Gromley. Many thanks for your observations. Yes I have learnt the hard way not to heed to much from rankings . GFRD being one of the classic disasters ranked a top stock with scores in the nineties earlier in the year. Now the sp has collapsed so to has their rating, all be it a bit behind the trend. Thankfully escaping even before Paul's very graphic deconstruction of their actual financial situation being far from the one portrayed by various commentators.

I have traded Kape a few times this year reasonably successfully after the massive retrace after their initial boost from the North American acquisition and one of their directors took a large slice around a pound. Simon Thompson of the investor chronicle continues to champion them, and he has flagged up some good trades this year, although it is noticeable that all these guys have a following enough to make an immediate impact on an sp of smaller shares they cover including are very own Paul Scot.

I tend to agree with you about FOMO not being the best reason to invest. I did actually sign up for PIA which started off well enough but has become increasingly erratic. I now have to connect via every other country in the world other than the uk and finally received this message from Kape tonight: Thank you for your response, for now, we are still working on to decommission all our legacy servers and moving them to the NextGen Server.
Should you have further questions please do not hesitate to ask.

Well I did have a further question which was when will normal service be resumed? which they appear to have missed or ignored.

As to your observation about convictions, I am beginning to think that should be incorporated in stock ratings, where Serco might find themselves top of the table.

As regards 'risks not needing to take', thats pretty much how I feel about Boo. I think part of Kape's many detractions is one of liquidity with such a high proportion (70%) being owned by the boss. I thought that in itself was illegal. Different rules for AIM?

Thanks again

Nick Ray

26th Oct '20

The strength of the stock ranks is that they are completely objective. They are also quite easy to understand and drill down into, which makes them very transparent, although Stocko is rather weak on being able to understand how a stock's history evolved - for the stock ranks or their components.

For Kape Technologies (LON:KAPE) the recent QVM history looks like this:

Momentum is good, but the Quality rank has dropped dramatically turning the stock into a "momentum trap".

Now, Stocko tell us which metrics make up the Quality Rank, so let's have a look at them to see what's going on:

[Minor caveat: I don't quite track exactly the metrics which the Quality rank uses, but it's fairly close.]

What I notice immediately is that ROCE and Op Mgn metrics are rising strongly, but gross profit to assets, F score, and Z score all fell strongly. (M score fell - but the M score is "smaller is better".) I can also see the date on which these changes occurred - they align with trading updates which gave new data for the system to crunch.

I'll leave it to others to explain why the metrics have moved the way that they have. But from a purely analytical point-of-view the Quality Rank is derived from the objective data it can see.

However the Quality Rank uses "ranks" not absolute values. And when we convert the data into "ranked" data it looks rather different:

As expected the "financial strength" metrics weakened from the 80s to the 20s approximately. But those rising "profitability" metrics are not in fact that great - they are rising from a low base. On the "Stock Report" page the fairly decent 1-year ROCE and Op Mgn look "middling" with yellow traffic lights. But the Quality Rank uses five-year averages and not what the Stock Report page shows. (The stock report does this rather a lot - it shows forecast/rolling values for Value metrics but the Value Rank uses historic values.)

[Before anyone asks, I can only create these plots because I have grabbed some data on some metrics for some stocks. But it would be great if Stocko could make more of the vast store of data that they must have accumulated by now available in digestible form for us subscribers!]

Oldratio

17th Mar '21

Comparing today's final results with last year's Annual Report makes me feel that the company's acquisitions may have altered its nature and direction of travel somewhat.

I have taken a position with a degree of confidence.

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Kape Technologies (KAPE) H1 20 results presentation

Ido Erlichman, CEO & Moran Laufer, CFO present H1 20 results to analysts, followed by Q&A, 15 September 2020.

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TamzinPiworld

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