Bulletproof Group Ltd (ASX:BPF)

September 30, 2015 | Price: $0.315

Growth Portfolio

Overview: Bulletproof Group Ltd (“Bulletproof”, “the Company”) is an Australian software company providing end-to-end and managed cloud services to business and government customers. Customers are billed upfront for consulting and implementation and then charged on an ongoing basis for hosting and management. Bulletproof listed on the ASX in January 2014 via a reverse takeover of Spencer Resources Limited.

Catalysts: Since the reverse takeover, Bulletproof has recorded accelerating revenue. During FY15 Revenue has increased 59%, while operating cash flow has improved 53% y-o-y. Approximately 75% of its revenue is of recurring nature providing somewhat income stability. The $3.5m acquisition of Infoplex Pty Ltd is expected to be FY16 earnings accretive and generate in excess of $2m EBITDA annually. Management has a favourable track record in the internet and software industry and is major shareholders in the Company.

Hurdles: Bulletproof’s acquisition strategy creates integration and funding risks. There is no guarantee that new businesses will generate sufficient earnings to justify the investment. Additional capital raisings and further dilution of shareholders are the primary risks.

Investment View: Bulletproof provides profitable exposure to the managed cloud service industry. Integration of acquisitions and further capital raisings are the primary risks. However, accelerating revenue and earnings are near-term drivers. With management’s proven track record in the industry, we initiate coverage with a ‘buy’ recommendation.

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S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this report is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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S3 Consortium Pty Ltd does and seeks to do business with companies featured in its reports. As a result, investors should be aware that the S3 Consortium may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making any investment decision. The publishers of this report also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this report.

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The information contained in this report is current at the finalised date. The information contained in this report is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

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