CipherPoint Shares have had quite the year for investors with shares trading as high as 75% up this year at $0.071. However, we think the worst may be over for the shares especially with the recent acquisition of Brace168.
CPT:ASX Share Price
The share price of CPT:ASX has been on quite the roller coaster ride over the past twelve months, however along the way delivering opportunities for large profits. At one point in time, shares were trading up as high as $0.071 with the 52-week low being much lower at $0.022
The stock has a 52-week range of $0.022 – $0.071 and at the time of writing is trading hands for $0.035 and a market capitalisation of $7.5million.
About CipherPoint (CPT:ASX)
CipherPoint delivers internet security solutions to businesses and governments to identify, protect, and control access to sensitive information. Cipherpoint solutions restrict access to sensitive content to IT administrators and make it difficult to steal or misuse information, rather than protecting the devices that store information.
With offices and customers in Australia, Europe and the US, organizations around the world rely on Cipherpoint products to protect their most sensitive data.
On the 21st Jan 2021, CPT:ASX agreed to acquire 100% of the shares in the cybersecurity platform Brace168. Brace168 provides managed detection and response services to medium and large-scale businesses and enterprises. This integrates well with the existing offering of CPT.
Brace168 has customers are across the financial property, manufacturing, technology and health sectors (including both ASX50 and ASX200 companies). This should offer a significant cross-selling / upselling opportunity from existing Brace customers to be offered CipherPoint Services and vice-versa.
Brace168 vendors as part of the deal will receive 21.75million shares in CPT or approximately 15% of the float at that point in time and options with a strike price of 0.08c per option.
Brace168 as FY20 revenues were A$1.2M1 and H1 FY21 of $1.3m2. This will increase the CPT group revenue substantially.
The CPT / Brace169 deal also has significant buy out / earn-out milestones around the company achieving $3million in revenue for FY2021 and $5million in revenue in FY2022. This is part of the reason we expect a significant increase in the CPT FY2021 and FY22 results.
If the above materialises we should see this contributing significantly to the group’s revenue and offering a potential catalyst for a share price increase.
CipherPoint Shares FY21 Market Update
The Company (CPT:ASX) provided a market update on the 21st July 2021 in relation to the June Quarter.
I am very pleased to advise that the Company achieved impressive June revenues of $378K (with Brace168 booking $336K the second-highest month ever), with group revenue for the June quarter total of approximately $800K. Cash receipts were slightly less. This will be confirmed in the Company’s Appendix 4C to be lodged shortly.
You can see the significant contribution of the Brace168 acquisition to the companies group revenues at over 88% of the total June revenue.
A highlight to point out in this update is the significant June quarter revenue for the group sitting at approximately $800k. Annualised this would equate to approx $3.2 million, which based on a price to sales ratio would be approximately 2x which represents value in our opinion.
CipherPoint Shares FY21 Annual Report
CPT:ASX released to the market back in March their Annual Report, In the FY21 annual report the company reported Revenues of $367,000 and a net loss of the year at $2.964million. You can see from the above that the Brace168 acquisition significantly changes the game here for CPT.
The company in the market update on the 21st of June generated more revenue in the month than CPT generated in the entire FY21 period.
CPT as of 31st March had a total assets holdings of $4.269million and net debt of $0. The company has net assets of $3.74million and a market capitalisation at the time of writing of $7.5million dollars.
We believe the Brace168 acquisition positions CPT:ASX strongly for the future.
CiphetPoint Shares Recent Insider Transactions
We always like to check out the insider transaction activities of key management persons within the company to see if they “see the value” within the company. Edward Pretty, CEO has been purchasing decent chunks of the shares on market since August 2020, buying up approx $45k of shares on market around the $0.048 – $0.06 per share.
|14 Oct 20||BuyAU$7,500||Edward Pretty||Individual||150,000||AU$0.05|
|07 Oct 20||BuyAU$14,400||Edward Pretty||Individual||300,000||AU$0.048|
|07 Sep 20||BuyAU$3,000||Edward Pretty||Individual||50,000||AU$0.06|
|01 Sep 20||BuyAU$2,750||Edward Pretty||Individual||50,000||AU$0.055|
|28 Aug 20||BuyAU$5,500||Graham Mirabito||Individual||100,000||AU$0.055|
|27 Aug 20||BuyAU$5,500||Edward Pretty||Individual||100,000||AU$0.055|
The Ownership breakdown of the company is listed below. The General Public own 75.6% of the company whilst individual insiders make up approx 16.7% of the company.
It would be great to see additional holdings from the management team, however, it seems that the stock is most held by the general public. In which retail sentiment would largely govern the share price. As we start to see the large contribution the Brace168 acquisition has to the company revenues we should hopefully see some uplift in share price.
CPT:ASX Prophets Take
CipherPoint may have finally turned a corner with the acquisition of Brave168 back in February, the acquisition seems to have materially contributed to the company FY21 market update with over 88% of group revenue coming from the Brave168 acquisition.
Should this revenue recognition continue, we should start to see some uplift in valuation in line with the significant revenue increases. The recent acquisition of Brace168 will enable the business to quickly scale revenues and improve financial performance.
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