Morning Note – 30 August 2024

CyanConnode (CYAN LN) - Largest LOA, by far

CyanConnode has received a Letter of Award (LOA) for its largest order to date. The contract is for 6.5m units, multiples bigger than its previously largest order of 1m units. The LOA increases its order backlog from 3.4m to 9.9m and it now fully covers our forecast for 84% revenue growth in FY25. The large LOA increases the company’s buying power and economies of scale. In addition, CyanConnode has secured favourable payment terms to help finance deliveries.

Buy BT at a long-term bottom?

Q2 EBITDA was up by 3% yoy. BT is well on track to meet its £3bn savings target by FY25 and we await the next phase (plan to shed 40% of staff by the end of the decade). BT is a long-term buy and hold. However two elements are likely to prevent a sharp increase in the short term: a dividend yield at 6.95% and short-term selling pressure with the possible exit from the share capital of Drahi or DT.

Filtronic - Scaling up for future growth

FY24 was a pivotal year for Filtronic, with revenue growth of 56% and operating margins expanding 12.7pp to 14.2%, as adoption of its technology in the space market accelerated. Orders from Filtronic’s largest customer drove a marked step up in revenue in H224 and support our FY25 forecasts. The company is focused on diversifying and scaling the business to support sustained revenue and earnings growth.

Filtronic - Filtronic FY24E results in-line, strong growth continues

Filtronic has reported FY24 results in-line with the trading update on 20 June 2024, and 2% ahead of our forecast at the adjusted EBITDA level. The company continues to benefit from its partnership with SpaceX Starlink in the Low Earth Orbit (LEO) satellites space. We maintain our FY25E revenue and earnings forecasts and maintain our target price of 91.9p.

Hybridan Research: Sector Review: Artificial intelligence in UK cybersecurity: the human uplift 17/04/2024

Artificial intelligence (AI) is a double-edged sword in cybersecurity. Whilst new AI models, architectures, and innovations are emerging to protect the security posture of organisations, attackers are also benefiting from deepfakes, sophisticated phishing, and automation of malicious codes. To ensure the impact of AI on cybersecurity to be a net-positive, we need to pit good AI against bad AI. Point solutions enhanced with machine learning: Global cybersecurity has been built with point soluti

BT stock: a case to follow very closely

There may be short-term selling pressure on the stock with the possible exit of the capital of Drahi or DT. Infrastructure funds are, however, certainly following BT closely. Several large private equity firms could launch a joint offer for the whole company if they can first find a price to buy Drahi’s and DT’s stakes.

Allenby Capital TMT Update - 18.03.24 - MWE.L, CHSS.L, CPX.L, BVC.L, SSIT.L

Please find below our weekly update covering themes that we feel that are of interest to investors and participants in the small and mid-cap TMT sector as well as commentary on recent newsflow.

Morning Note – 22 August 2024