Two sides of the Internet

Internet hype pushes SNS up

In general terms, it's wise to steer clear of stocks that have risen quickly in a short period of time - usually it's evidence that a kind of mania has overtaken the stock. Such has been the case with Secure Network Solutions, a well-managed Melbourne-based company whose shares have well and truly 'taken off' since February 1999, with the Internet boom the most likely culprit for the share price surge. Before this it hadn't bettered its June 1997 post float high of around $0.40.

In a world where privacy is a major concern, especially on-line, a company that produces a range of software and hardware products for data encryption is bound to get attention. What's encryption? It's best illustrated by use of an example. If you're purchasing a product over the Internet you will invariably be asked to submit your credit card details. Unfortunately, in many cases you don't know who is receiving them and whether other parties are looking over your shoulder while you're making the purchase. Secure Network Solutions develops hardware and software to overcome these problems.

The company was formed in 1996 in order for Randata, as it was then known, to be spun off from its parent company - Hawker Richardson in 1993. Hawker Richardson's present owner, the well-regarded Austrim, retains an 18% stake. MD Geoff Ross, a twelve-year veteran of the company and Chairman David Greatorex, also have a substantial shareholding.

Too hard, too fast

As with some of the more successful Internet-related companies SNS is experiencing strong growth with sales revenue increasing 44% to $6.1m in 1997/98. The company actually registered a $0.3m profit in this period although it made a small loss for the half-year to December. Like most Internet companies, the market expects a steady flow of announcements and when queried by the ASX about its share price on 4 May, explained that it had 'a number of major projects at various stages of negotiation'.

Ultimately, though, Secure Network's best resemblance to other Internet companies is the massive valuations it now commands. While the share price may still have some distance to go, we recommend that at the very least investors should TAKE PART PROFITS.