Ethernity Networks#: Initiation of Coverage
5G a Significant Opportunity
Ethernity Networks (LON:ENET) develops technology for networking and security acceleration for 5G networks that is sold standalone or supplied fully programmed in a Field Programmable Gate Array (FPGA) semiconductor based SmartNIC (Smart Network Interface Card). Ethernity technology addresses 5G Cloud - Radio Access Network (C-RAN) infrastructure, from fibre optic connectivity to processing of user data traffic. Data traffic is growing dramatically across internet, corporate and mobile networks. Ethernity’s SmartNIC technology frees up the servers in data centres and those of mobile network providers, from network traffic processing. This saves on the capital cost of server processors (CPUs) and accelerates data.
Relationships with leading Mobile Providers
5G network infrastructure is being rolled out fastest across China followed by the U.S. Ethernity, an Israel based technology company, has a direct relationship with three major Mobile Network Operators (MNOs) - China Mobile, China Telecom and China Unicom. Ethernity is seeing increased focus on building a 5G mobile network based on Network Function Virtualisation (NFV) which is opening up SmartNIC engagement opportunities not just in China but also the U.S.
Market Validation for the Technology
Ethernity technology is gaining credible external verification. In February 2020, Ethernity, as a supplier of data processing offload solutions on programmable hardware for accelerating telco/cloud networks, was named as a “Vendor to Watch” in a February 2020 Gartner research report titled Market Trends: Function Accelerator Cards Disrupting Traditional Ethernet Adapter Market.
Recommendation and Target Price
If Ethernity can progress revenue as we forecast for 2021 and achieve confirmed design wins in 5G, its valuation could be substantially higher than it is now. The current depressed valuation does not reflect the IP, market interest already achieved, and limited number of players in the space, leaving the company a potential takeover target. Our peer group analysis supporting a DCF valuation, sets a target price of 52p/sh implying 188% upside and we initiate with a Buy recommendation.
Phil Smith, Equity Analyst, Technology | T: +44 (0)20 3617 5187 | E: [email protected]
VSA Capital Limited, New Liverpool House, 15-17 Eldon Street, London EC2M 7LD | www.vsacapital.com
This email is intended solely for the named recipient. It may contain privileged and/or confidential information. If you are not one of the intended recipients, please notify the sender immediately, and destroy this email: any disclosure, copying to any person or any action taken or omitted to be taken in reliance on this e-mail, is prohibited and may be unlawful. Any views expressed in this message are those of the individual sender, except where specifically stated to be the view of VSA Capital Limited, its subsidiaries or associates. Whilst all efforts are made to safeguard inbound and outbound emails, VSA Capital Limited and its subsidiaries or associates cannot guarantee that attachments are virus-free or compatible with your systems and do not accept any liability in respect of viruses or computer problems experienced.
VSA Capital Limited will use your personal information to administer your account in order to provide any products and services you have requested from us. Your personal information will be kept secure and will not be shared with any other party unless you provide consent to that effect.
VSA Capital Limited is Authorised and Regulated by the Financial Conduct Authority and is a member of the London Stock Exchange.
The Company is registered in England with company number 2405923 at New Liverpool House, 15-17 Eldon Street, London EC2M 7LD.