CYBER1 - An undervalued defence - Mangold Insight Analysis

Mangold is initiating coverage of the cyber security company Cyber Security 1, “CYBER1”, with the Buy Recommendation and the price target of EUR 0.057 per share over a 12-month period. CYBER1 offers cyber security-related products and services in three business areas. This includes identifying vulnerabilities through professional services, advising on information management, monitoring potential threats in real time, and selling cyber security software products.

The company's main markets are Africa and the Middle East, but they are also found in Europe, India and Peru. The cyber security market is growing at a rapid pace. The cost of cybercrime and the frequency of attacks are increasing. Despite this, a significant number of IT Managers believe that their organisations are under-invested in cyber security. Mangold takes a positive view of the large underlying market demand, and believes that the company can increase its sales based on their comprehensive offers and key relationships with suppliers in cyber security. Mangold also believes that CYBER1's new Managed Services business area can improve profitability in the future.

Mangold values CYBER1 with a DCF model, and has performed a scenario analysis. In a base scenario, the valuation gives a price target of EUR 0.057 per share, corresponding to an upside of 111 percent. In the scenario analysis a price range of EUR 0.037 to EUR 0.092 is observed which indicates an upside in all of the tested cases. In order for the price to be realised, it is necessary for CYBER1 to succeed in improving its margins and keep a high rate of growth.