BNET investment thesis

From the beginning of our journey as a listed company we have tried to convey “our value proposition” to investors in an as transparent manner as possible. In other words, what we offer to investors, which is the investment thesis that anyone who chooses to trust us can have.

This can be expressed very simply in the following sentence:

You invest in the medium and long term in BNET shares if you want exposure to the Romanian IT&C industry, an accelerated growth field, together with a management team that has not only skin in the game but also demonstrated over 15 years better results than industry average, both operationally and in terms of capital management.

Each of the decisions we make is aimed at building an anti-fragile group, so that we have the strongest force – time – with us (“Time is the friend of the wonderful business, the enemy of the average ones”). The second element is the combination of ‘good operations’ and the ability to manage capital, as described in the ‘secret of success’ in the book ‘The outsiders – 8 outstanding CEOs’.

Below are some arguments for each of the components of this investment thesis:

Is a decision that completely eases both the work of investors and decreases the importance of choosing a competent management: “a rising tide lifts all boats”. There has been no industry in the last 20 years that has continued to grow faster than the IT&C industry.

Solves the ‘principal-agent’ problem so demanded by investors on the Romanian capital market. If the well-being of the management comes from the same sources, through the same mechanisms as the small shareholders, the most important conflict is eliminated. Thus, in our case, the value of BNET shares represents for management both most of the personal wealth and most of the income (unlike salary, the option-based compensation policy aligns the management’s income with the wealth brought to the shareholders).

In addition to numerous international recognitions (Deloitte Top 50 in Tech, Financial Times Top 1000 Fastest Growing Companies, EY Entrepreneur of the Year finalists, etc.), we can illustrate the operational capacity in 2 ways:

  • I saw in 2021 an announcement of a very respectable IT company that was doing a retrospective of the entire activity, on the occasion of a 10 or 15 year anniversary. During this period, the company successfully delivered over 700 projects. By comparison, Bittnet delivers over 4,000 projects annually, with minimalist operational overhead, both in terms of cost and time. The fact that our initial activity is basic is IT training and, the specific complexity of successfully organizing this business, forced us to build systems and operational tools specific to companies much larger than business, with increased complexity. On the other hand, once this impediment is overcome, we now enjoy a competitive advantage that is hard to match from this point of view.
  • Analysing the historical evolution of the return on equity (Return on Equity), it always has values around 41%.

The growth rate of equity attracted historically, through the mechanisms of the capital market is about 43%, which strengthens our confidence in the adopted financial model, which we intend to continue to apply as long as the results continue to be visibly better than the market average.

Net Profit
Equity t0 ROE
2014 115 865
2015 889 1,920 103%
2016 870 3,100 45%
2017 1,206 5,961 39%
2018 4,408 14,001 74%
2019 -4,459 12,372 -32%
2020 1025 27646 8%
2021 14,424 55,249 53%
Average 42%
Operation Amount
Equity la 15 apr 2015 -864,743
MCS05-Dec-17 -807,127
MCS14-Dec-18 -2,892,205
MCS10-Apr-20 -9,168,712
MCS02-Mar-21 -10,725,345
Equity la 30-Sep-21 52,999,851
Din care, sume atrase -23,593,389
IRR 42.9%

Of course, some investors may find that any of the components of the investment thesis described above do not match their investment style. However, we would like our shareholders to understand the “bet” they make when investing in Bittnet Group shares: the fact that the vision of accelerated growth towards a turnover of RON 500 million generates a special opportunity in the medium and long term. and that sometimes the evolution of quarterly, half-yearly or annual results will fluctuate.

We, the management team, are here to clarify these fluctuations and to guide our journey together towards the figure of RON 500 million, without having as objective the share price, which, on the contrary, is decided by the shareholders. However, we are convinced that in the long run the value of the company will reflect the business results.

We conclude this chapter by reminding you that no investment in the shares of a company is risk-free, and please read carefully the chapters on Risks in the Universal Registration Document, or on the investor relations website.