Silver Bullet Data Services Group PLC (LON: SBDS)  

Silver Bullet Data Services Group PLC (LON: SBDS) is an FTSE AIM All-Share index listed digital transformation Company that provides future-proofed solutions for a privacy-first, post-cookie era. Moreover, it generates powerful business outcomes and customer-centric experiences through the blend of technology and expert professional services. SBDS has been successfully trading on AIM since 28 June 2021

Growth Prospects

• Spanish Agency Contract: SBDS had entered a contract with Madrid-based Equmedia XL for the use of the 4D products. With this, the Company aimed to scale up activities throughout 2022 across the Equmedia client base. Moreover, the Company had also recently won a 4D product contract with a German partner, pilot GmbH & Co.KG, to enable critical transformation from third-party cookies to contextual data
• New Clients: SBDS had added 13 new services clients during H1 FY21, including ITV and Venture Crowd. Furthermore, the Company had consolidated existing services clients because of additional contract wins with Channel 4, Heineken, and Jägermeister.
• Expansion of 4D Office: SBDS had expanded the 4D-focused US office with the recruitment of VP Partner Solutions, Director of Product Marketing, Senior Director Strategic Sales, and a Client Success Director.

  Key Risks

• Stock Price Correction: The stock price corrected by almost 18% since it got listed on 28 June 2021.
• Wrong Strategic Choices: The failure of partner relationships could adversely impact the business in the near term.
• Covid-19 Pandemic: The daily COVID cases in the UK surged to a record 78,610, which may result in increased restrictions over the period.
• Federal Reserve Meeting: The Fed would accelerate the tapering of asset purchases to USD 30 billion per month from USD 15 billion per month. Meanwhile, the interest rate hike would likely happen thrice in 2022.
• Inflation Rate: The UK inflation rate rose by around 5.1% for the 12 months to November 2021. Moreover, it had breached 10-years high ahead of the key Bank of England meeting today.
  

Now, we will analyse the Key Fundamental Statistics & Shareholding Pattern of Silver Bullet Data Services Group PLC.

Morris (Keith) is the most significant shareholder as it holds nearly 1.50 million shares as of 30 September 2021. 

H1 FY21 Financial & Operational Highlights (for six months ended 30 June 2021, as of 20 September 2021)

(Source: Company result)

• Robust Top-Line Business: The top-line revenue increased by around 30% from £1.28 million during H1 FY20 to £1.67 million for H1 FY21, exceeding the management expectations.
• Board Changes: The Company had appointed Kristen Kelly as Chief Operating Officer during H1 FY21.
• Profitability: SBDS had widened the earnings per share (loss) from a negative 41 pence per share for H1 FY20 to a negative 44 pence per share for H1 FY21.

Share Price Performance Analysis (since 28 June 2021)

 (Source: Refinitiv, Research done by Kalkine Group)

In the report, we have assumed GBX 225.00 stock price for our analysis as on 16 December 2021 at 08:00 AM GMT. The last traded price on LSE was GBX 225.00 at the closing of 14 December 2021. The stock has been at the same level post that due to thin liquidity and muted volume. Stock 52-week High and Low were GBX 342.4 and GBX 215.00, respectively. From a technical standpoint, SBDS is hovering around the lower Bollinger band, indicating an upside potential in the stock price. Moreover, the 14-days RSI of ~24.59 supports an upside momentum in the stock price.

Valuation Methodology: Price/Sales Approach (NTM) (Illustrative)

Business Outlook

The Company had reported strong top-line business for H1 FY21, which remained more than the expectations. Moreover, the Company had expected exponential growth of programmatic media for H2 FY21 and FY22. Thus, SBDS would aim to capitalize on increased market opportunities with a positive environment towards both the services and product business. Furthermore, the shift in consumer behaviours towards accelerating business investment in marketing technology and data would improve the business prospect for the Company.

Considering the penny nature of the stock, SBDS may undergo sizeable corrections because of the UK inflation reaching a 10-year high during November 2021, record Covid-19 cases in the UK, and Federal Reserve interest rate hike expectations. Thus, it may depend on the risk appetite of the investors to take a reasonable position in this company having bright prospects for the 4D product.

Considering the recent contract wins, the bright outlook for the 4D product, decent top-line business, and support from the valuation as done using the above method, we have given a “Speculative Buy” recommendation on Silver Bullet Data Services Group PLC at the current market price of GBX 225.00 (as on 16 December 2021 at 08:00 AM GMT), with lower-double digit upside potential based on 10.75x Price/NTM Sales per share (approx.) on FY21E sales per share (approx.).

*The reference data in this report has been partly sourced from REFINITIV.

*All forecasted figures and Peer information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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