The Investment Column: Internet Tech

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The Independent Online
INTERNET TECHNOLOGY Group, the AIM-listed Internet service provider, drew heavy City interest with an interim results presentation yesterday attracting 30 analysts and investors. Their interest is straightforward: ITG is one of only two (EasyNet is the other) UK-listed Internet Service Providers planning a full market listing by year-end.

ITG is attractive on three accounts. First, year to September annual sales should surpass pounds 20m, almost double a year ago. Such growth may accelerate further as UK and European Internet usage expands. Second, with a market capitalisation of pounds 75m, ITG trades at about 3.75 times sales, a steep discount to the 8-10 times sales rating awarded peers like EasyNet or Concentric Network in the US.

Finally, the proportion of sales from business customers, which offer higher margins and more commitment, are soon to outweigh its original revenue base as an ISP for domestic consumers. Full-year losses are expected to be around pounds 2.5m, easily manageable given the group's investment assets of pounds 15m.

ITG could be hit in an Internet sector crash but, given its low rating and solid growth prospects the shares are likely to prove attractive longer term.