02-03-12 Special Investment Report, Xelleon PLC (XLL.F) is UNDERVALUED states M. Schwarz in CDC CAPITAL
Sent Friday, February 3, 2012
Special Investment Report, Xelleon PLC (XLL.F) is UNDERVALUED states M. Schwarz in CDC CAPITAL
Fair Value of € 3.02, Yesterday it Closed at: € 0.75
Xelleon PLC (XLL.F) COMPANY PROFILE
Xelleon
PLC's core competency lies in the development of cognitive scripting
encryption systems that thwart hacker's attempts to decrypt data. Its
piracy protection system called Impervio(TM) aims at deterring hackers from
pirating downloadable video, audio and streaming content and therefore
protects the intellectual property of movie, music, documents, data,
game and literary publishers.
The technology can be applied in the
fields of Digital Rights Management, Document Security, Government and
Institutional Communications, Web Server and Data Flow Security, Cloud
System Security and Financial Transaction Security. With respect to the
latter one, Xelleon PLC (XLL.F) has been able to completely secure
personal financial data from middle man attacks where financial
transactions are concerned, relating to mobile payment, online payment
and debit credit card terminal payments.
Regarding the name of the
company, Xelleon (zel'-lee-on) means "Achieving an undefined status or
standard higher than what is currently obtainable." With its main office
in Toronto, Canada, and a Research & Development Division in Salaj,
Romania, Xelleon PLC (XLL.F) is listed on the Frankfurt Stock Exchange
since May 2011.
Special Investment Report, Xelleon PLC (XLL.F) is UNDERVALUED states M. Schwarz in CDC CAPITAL
Xelleon PLC (XLL.F) CONCLUSION AND VALUATION
Xelleon's
encryption software solution Impervio(TM) as well as its Simpozia(TM) DRM
technology secures delivery of digital content over the web and
networks. The addressed market potential is tremendous. However, Xelleon
PLC (XLL.F) is still in the launching stage of its products and needs €
5 million capital in order to finance the market entry expenses.
Under the assumption of a successful market penetration, revenues for FY
2013 are expected to be around € 43.3 mn. accompanied by net earnings
of around € 18.3 mn.. In this context should be mentioned that on the
one hand the zero tax rate results from the fact, that the company is
registered on Isle of Man. On the other hand, the high profit margin
derives from the licensing sale strategy of the technology with low
material respectively fix costs arising.
Given our revenue and
profit forecast for the upcoming years, which is pretty much inline with
the company's guidance, the Discounted Cash Flow model delivers a fair
value of € 3.02. Taking the early stage of Xelleon PLC (XLL.F) (no track
record available) into consideration, we value the shares with a 50%
equity risk premium, which in our view reflects the risk connected to
that in an appropriate way.
With respect to the share price at the
time of the analysis (January 31, 2012, closing price XETRA) of € 0.91,
the price increase potential is 231.9%.
Therefore our investment recommendation is "UNDERVALUED".
Download the complete Report here: XLL.F Research 02-02-12
About CDC CAPITAL GMBH
"Trust Research" is a brand of CDC CAPITAL GMBH.
Conflicts of interest
CDC CAPITAL GMBH or its affiliates
1. do not own securities of the respective company
2. have not been involved in the issuance of securities of the respective company
3. have contractual relations with the respective company for providing investment research
The respective company is not participated in CDC CAPITAL GMBH.
Investment recommendations
UNDERVALUED: In our opinion, shares of the respective company should yield an increase in value of at least 15% over a twelve-month period.
FAIRLY VALUED:
In our opinion, shares of the respective company should yield a share
performance within a target corridor of +/- 15% over a twelve-month
period.
OVERVALUED: In our opinion, shares of the respective company will yield a decrease in value of at least 15% over a twelve-month period.
Information on the author and responsible parties
Author of this study: M. Schwarz, CDC CAPITAL GMBH
Responsible company: CDC CAPITAL GMBH, Freischützstr. 96, 81927 Munich
Additional information
Publication: Initial evaluation (Initial Coverage)
Date of first publication: February 1, 2012
Date of share price: January 31, 2012
Others: This study has been submitted to the company for review.
Supervisory authority
CDC CAPITAL GMBH is supervised by the Bundesanstalt für
Finanzdienstleistungsaufsicht (German Federal Financial Super-visory
Authority), Graurhein¬dorfer Straße 108, 53117 Bonn und Lurgiallee 12,
60439 Frankfurt.
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