VSA Morning Technology Comment, 10/03/21
Ethernity Networks (LON:ENET)
Ethernity Networks Ltd (LON:ENET) has today announced the appointment of Joseph ("Yosi") Albagli as non-executive Chairman of the Board. The appointment is effective today.
Ethernity is a technology provider of data processing offload solutions on programmable FPGA (Field Programmable Gate Array) hardware for accelerating telecommunication and cloud networks.
The Company’s Ethernet (LON:ENET) technology is used at the heart of digital communication networks and is required to manage and process huge volumes of data traffic. Users are government, military, corporate and telecommunications companies - Ethernity is working on 5G opportunities with Mobile Network Operators.
Yosi Albagli has over 30 years of experience in engineering, business strategy and management, and entrepreneurship in the communications industry. After spending ten years as an engineer at Israel Aircraft Industries and Tadiran Telecom, he co-founded and served as President and CEO of Tdsoft Ltd in 1994, leading the company from its foundation toward becoming the leader in V5 solutions. In 2005, he led a reverse merger with VocalTec (NASDAQ: VOCL) becoming President, CEO and a board member, growing the company's market share, and establishing it as a leader in Voice-over-IP technology.
Yosi also served as President and CEO of CTWARE Ltd., as a board member of ITGI Medical (TASE), and as President of the Satellite Communications division for Orbit Communication Systems (TLV: ORBI), where he changed the company's focus toward targeting high-end, complex solutions. Since he co-founded the company in 2013, Yosi has served as the Chairman of Over-Sat Ltd, which provides communications solutions for the maritime, airborne, and government markets. Yosi is a Cum Laude graduate of The Technion - Israel Institute of Technology with a BSc degree in Civil Engineering and a veteran of the Israeli navy, in which he taught electronics.
We believe that Yosi Albagli’s appointment is excellent news - he brings a wealth of experience to Ethernity at a time when it faces outstanding opportunity in its markets, particularly 5G.
Ethernity’s SmartNIC technology frees up the servers in data centres and those of mobile network providers, from network traffic processing. This saves on capital cost of server processors (CPUs) and accelerates data. 5G network infrastructure is being rolled out fastest in Asia followed by the U.S. and other areas. The Company is testing and developing its product both with OEMs and end-users including national telecoms operators. Initial testing phases are reporting as progressing well with larger scale field trials prior to eventual commercial deployments.
The share price has risen 80% since we first recommended them at 18p in September 2020. We think there is certainly further to go and that the current valuation does not reflect the IP, market interest already achieved, and limited number of players in the space.
Our peer group analysis supporting a DCF valuation indicates a target price of 53p/sh implying 63% upside. Buy.
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All disclosures and supporting charts can be found in the PDF version.
Phil Smith, Equity Analyst, Technology | T: +44 (0)20 3617 5187 | E: psmith@vsacapital.com
VSA Capital Research | T: +44 (0)20 3005 5000 | E: research@vsacapital.com
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