report out......70 cent target !!

Great report posted on Senetas.....
Saying it's about to break through resistance and head for a 70 cent price target within 12 months....
Read below:

Senetas Corporation Limited (SEN) Recommendation Buy
Risk Rating High

Sector Internet Sec
Index NA
Market Capitalisation 158 m


Strategy
First Recommended 21/08/2005
Share Price * $0.34
12 Month Price Target $0.70
Suggested Stop Loss $0.19


An experienced management team with a strong information, legal and commercial focus.
Strong revenue and earnings per share growth, with forecast of net profit in excess of $7m.
Strong commitment to R&D which will likely account to 11% of expenses in 2005.
Strategic alliance with Safenet Inc, which is experiencing record growth and demand for SEN's encryption technology.
Strong new uptrend in force since September 2004.


Background

Senetas Corporation Limited (SEN) is a leading provider of high speed encryption technology to government and business sectors around the world and is also focused on providing Enterprise Information Management Solutions.

Investment Summary

SEN is an impressive 'growth' story that appears to benefiting from the global demand for IT security and data integrity. With over 50% of its revenues now derived from its security business, much of SEN's strong growth forecasts are tied to the success of its NASDAQ listed partner Safenet. US banking and finance institutions are leading the demand for the SONET encryption technology and this trend is expected in Australia. SEN has a strong balance sheet with strong earnings per share growth expected. Competition remains the greatest risk to SEN as well as reliance on growth from Safenet. SEN is recommended as a 'buy' to members at current prices and comes with a 'high' risk rating.

Operating Performance

The half year performance to December 2004 confirmed revenues of $12m and a consolidated profit of $3.5m. Following up from the $16.5m of revenues for the financial year of 2004 and a maiden profit of $3.2m, SEN appear on track to double this figure for the 2005 financial year. Guidance is for the achievement of $25m in revenues and net profit in excess of $7m. With $6.5m cash at bank, SEN have a robust balance sheet showing year on year growth and performance. At current prices, SEN trades at a rolling PE Ratio of 16.7 which is conservative for a growth company of its calibre.


Growth/Value Story

Vital to SEN's future growth targets remains the strategic alliance with Safenet, a NASDAQ listed company. SEN provides Safenet with its core SONET encryption technology and is also the exclusive distributor of Safenet products in Australia and New Zealand. After only six months of release of the SONET technology in the US, Safenet achieved revenues of US$25m and now estimates the market size in the US for this type of technology to be US$70m to US$100m per year. This can be attributed to the strong interest by financial institutions. Much of SEN's future earnings projections are based on the success of Safenet.

SEN's strength also lies in the quality of its blue-chip customers. In Australia, they include Telstra, Harvey Norman and Newmont.