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WhiteHawk Ltd Limited

ASX:WHK

Last Price:

$0.056

Our Investment Summary

Date of
Initial Coverage

01-May-19

Initial
Entry Price

$0.065

Returns from
Initial Entry

-14%



Investment Memo: WhiteHawk Ltd (ASX:WHK) - LIVE

Opened: 25-Feb-2022

Shares Held at Open: 4,385,547


What does WHK do?

WhiteHawk (ASX:WHK) is an ASX-listed, USA based cybersecurity company, providing cyber risk products, services and solutions.

What is the macro theme?

Global cybersecurity threats are growing and businesses and governments are ramping up spending on their cybersecurity defences. Increasingly state sanctioned, or state-tolerated actors are involved in major attacks, meaning cybersecurity has never been more important.

Why did we invest in WHK?

Strong management team

With deep connection to US government organisations, proven ability to sign big contracts with big organisations

Large contract sizes

WHK is slow to progress deals, but when they happen they are generally for large $ contracts, with big organisations that are sticky customers.

Partner deals to deliver revenue

Key partner deals signed with more in the pipeline, yet to deliver revenue

Tiny market cap

Around $25M with US$2.3M revenue in 2021 and a growing presence in a high-growth industry, the share price could re-rate if WHK announces sizeable contracts with major partners

What do we expect WHK to deliver in 2022?

Objective #1: More contracts, partnerships and proofs of concept

WHK management has proven they can sign contracts and partnerships with top tier large organisations, but the deals are slow to be delivered. We want to see the effort of the last few years in building the pipeline come to fruition in 2022, with WHK delivering the following:

  • 3x new contracts with large organisations (governments or global enterprise)
  • 3x new partnerships
  • 15+ new Proofs of Concept

Objective #2: First revenue from channel partnerships

WHK has already signed some interesting partnerships deals (Dun & Bradstreet, Amazon web services) which have great potential, we want to see the first revenue coming in from these partnerships.

Objective #3: Proofs of Concept (POC) increase to full, multi-year contracts

WHK is signing proofs of concept (small paid contracts to try the product, that lead to bigger contracts if successful) - we want to see WHK successfully convert several POCs to large contracts.

Objective #4: Double revenue in the next annual report

Objectives 1, 2 and 3 will lead to the ultimate goal of growing revenue, for a strong share price performance we want to see WHK double its revenue this US financial year - targeting a topline revenue of US$4.6M (which is double the recently released US FY21 financials at US$2.3M).

What could go wrong?

Sales Risk

Deals continue take a long time and investors lose interest, alternatively loss of key contracts

Market Risk

Covid resurgence delays government spending once again

Competition Risk

The cybersecurity industry is a competitive space. Other companies may step in and take key clients

What is our investment plan?

We have been holding WHK for a few years now, we announced it to our portfolio in May 2019. We really back the management team to deliver and are happy holders into 2022 despite recent share price weakness.

We will likely look to further increase our position in WHK over the next few months if prices remain around current levels.

We will hold a position in WHK for at least another 3 years. If the share price reaches near previous highs we will look to take some profit and reduce total position by up to ~25%


Disclosure: Disclosure: The authors of this memo and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities, own 4,385,547 WHK shares at the time of writing. S3 Consortium Pty Ltd has been engaged by WHK to share our commentary on the progress of our investment in WHK over time.


Investment Milestones for WHK

Initial Investment: @ 6.4c
Top Slice
Free Carry
Increase Investment: @ 11.4c
Free Carry
Increase Investment: @ 13.31c
🔲 Free Carry
Increase Investment: @ 16.77c
🔲 Free Carry
🔲 Take Profit
Price increases 300% from initial entry
Price increases 500% from initial entry
🔲 Price increases 1000% from initial entry
12 Month Capital Gain Discount
🔲 Hold remaining Position for next 2+ years


Our Past Commentary on WhiteHawk Ltd

Date Title
26-Feb-2022 $ 0.110 The War Begins, Cybersecurity, Food Security, Energy Independence and Precious Metals
25-Feb-2022 $ US braces for Russian Cyber Attacks in Response to Sanctions
21-Feb-2022 $ 0.000 Why we invest in Oil & Gas and Precious Metals
31-Jan-2022 $ 0.098 Inflation, US Fed Reserve, Bond Yield, Cash Buffer Portoflio
30-Oct-2021 $ 0.160 The fallout from the VUL short attack explained
04-Sep-2021 $ 0.205 Annual Reports, Uranium and a Welcome to New Subscribers
28-Aug-2021 $ 0.180 Recap of the KNI IPO and share price run
21-Aug-2021 $ 0.190 Market fluctuations and portfolio news and quick takes
20-Aug-2021 $ 0.175 WHK comes out of hibernation with US$1.185M contract with the US Federal Government
11-May-2021 $ 0.165 We added to our WHK position on-market last week
27-Apr-2021 $ 0.230 Our Portfolio Performance from January 1st to March 31st 2021
22-Jan-2021 $ 0.385 Two Tech Stocks for 2021
07-Jan-2021 $ 0.300 Our Stock Picks for 2021
21-Dec-2020 $ 0.280 Last 48 Hours Reveals Cyberattack on US Government Way More Serious Than Anyone Thought
30-Oct-2020 $ 0.205 Immediate Upside? WHK Reveals Future Revenue Growth
07-Oct-2020 $ 0.140 WHK Secures A$2.1M US Government Contract Extension
28-Jul-2020 $ 0.125 WhiteHawk Wins US Federal Government Cybersecurity Contract Worth up to US$5.9M
22-Jun-2020 $ 0.069 A Wave of Cyber Attacks has Whitehawk (ASX: WHK) Primed to Run
30-Apr-2020 $ 0.055 WHK Expands its Cyber Risk Program, Delivers Huge Lift in Revenues
15-Apr-2020 $ 0.066 WHK Confirm US$400k SaaS Sales via New Sales Channel
14-Aug-2019 $ 0.105 Contract Renewals Confirm WhiteHawk Cybersecurity Expertise
31-Jul-2019 $ 0.100 WHK Keeps Stacking up Major Revenue Generating Deals
18-Jun-2019 $ 0.105 WHK Expands US Defence Contract as Cybersecurity Sector Heats Up
28-May-2019 $ 0.120 WHK Gains Access to Tens of Thousands of Small Business Customers as US-China Tech Cold War Emerges
03-May-2019 $ 0.100 Our Top Pick of 2019 Locks in Yet Another Major US Contract
01-May-2019 $ 0.081 REVEALED: Our Top Pick for 2019



Investor Presentation

Up 20% on strong cybersecurity sales figures

ASX:WHK Apr 29, 2022 Announcement


Our cybersecurity investment, WhiteHawk (ASX:WHK), released its quarterly report today and with the stock up ~20% this afternoon, it seems the market liked what it contained.

WHK reported that it invoiced US$1.8M during the quarter — a 4X increase on the US$442k invoiced in the same period in 2021.

The company collected US$2.2M relating to sales receipt from customers, and was owed US$505K in receivables as of 31 March.

This solid result saw WHK end the first quarter with a cash position of US$2.1M and no debt.

Its year on year revenue continued to grow to US$2.3M for 2021 up from US$1.9M for 2020, while it has put in place Master Service Agreements (MSA), Proof Of Concepts (POCs) and new strategic opportunities to support ongoing revenue growth.

In our 2022 WHK Investment Memo our fourth key objective was to see WHK double its revenue in its next annual report. Being US-based, WHK reports on a calendar year basis so with US$2.1M in revenue in this first quarter we may see WHK reach our targeted US$4.6M top line revenue figure if it continues along this path.

WHK has a number of high level objectives relating to product improvement, growing its reach across new and existing pipelines, and further advancing and executing on current contracts.

In the near term, WHK has four clear objectives:

  1. Close on three current Cyber Risk Radar & Program contract proposals, based upon successful Proofs of Concept (POC).
  2. Advance Dun & Bradstreet and Amazon Web Services sales to US Federal Systems Integrators and US federal and commercial sectors – contracting Cyber Compliance and Cyber Risk Scorecard subscriptions respectively.
  3. Kick-off Cyber Risk PaaS & EMBED Cyber Risk Scorecard sales to one of the current financial sector clients in the pipeline.
  4. Maximize ceiling on current government contracts and respond with Defense Industrial Partners on two known 2022 Cyber-Supply Chain Risk Management Requests For Proposal.

Newsflow from the company has been fairly quiet for some time now, so we await confirmation that the team is progressing partnerships and contracts behind the scenes.

We do know that WHK’s large, sticky, and often sensitive contracts take some time to finalise, but are well worth the effort once they are locked away.

For all of the objectives that we set for WHK in 2022 see our WHK Investment Memo.