How to profit from the surge in BuildTech
How can an outside investor gauge the quality of a company’s software? Speak to experts, test the product, ask clients and/or review industry awards/journals. Elecosoft scores highly on all of these counts - yet to us what really stands out is its customer base.All told, ELCO’s software is used by >90% of the UK’s top 100 construction firms & 7/10 biggest retailers; 40 of the top 50 Swedish & 14 of the largest German construction groups; 70% of the EU’s flooring manufacturers and 15% of 400 largest US contractors. Generating retention rates of >90% and almost 60% recurring revenues (Support, maintenance & SaaS).
The good news from this morning’s positive trading update, is that the Board are well on track. H1’18 revenues climbed 7% LFL in constant currency (5% post forex headwind) to circa £10.5m (LY £10.0m) with adjusted PBT jumping 45% to £1.45m (LY £1.0m), on the back of favourable operating leverage and continued tight cost control.
Consequently, we reiterate our FY18 sales and EBIT forecasts of £22m and £3.6m respectively. Albeit, note that these are tilted towards the upside, especially given recent £ weakness vs the €/$. Likewise, H1 cash generation was strong, ending June with net funds of £2.6m compared to £1m at the start of the period – equivalent to cash conversion of >105%. Plus, even after last month’s strategic acquisition of Shire Systems for £5.1m (cash/debt free basis), we expect net debt to close Dec’18 at a modest £2.8m, or 0.62x EBITDA.
Similarly, while our top level 90p/share valuation remains unchanged, we once again emphasise that there is possible upside here too. In fact, despite this year’s re-rating, the stock appears cheap vs peers who trade on higher EV/sales, EV/EBIT and PE multiples.
Accesso Technology Group is engaged in the development and application of ticketing, mobile and eCommerce technologies, and virtual queuing solutions for the attractions and leisure industry. Co.'s solutions include accesso LoQueue, accesso Passport, accesso Siriusware and accesso ShoWare. Co. primarily has operations or customers in the U.K., the U.S., Canada, Italy, Germany, Australia, Brazil, and Mexico.
Elecosoft is a provider of integrated software applications and related services to international architectural, engineering and construction marketplaces and property management industries. Co. develops its specialist software through its own development teams in Sweden, Germany and the UK. Co. services its customers directly in its primary markets of Sweden, Germany, Benelux, the U.S and the U.K and indirectly to its non-core markets through a network of channel partners.
Intuit helps consumers, small businesses, and the self-employed prosper by delivering financial management and compliance products and services. The company also provides tax products to accounting personnels, who are main partners that help the company serves small business customers. The company organizes its businesses into three reportable segments: Small Business and Self-Employed, which provides QuickBooks financial management solutions to solve financial and compliance problems; Consumer, which includes TurboTax products and services to prepare and file income tax returns; and Strategic Partner, which includes professional tax offerings and serve professional accountants in United States and Canada.
Oracle provides products and services that address enterprise information technology (IT) environments. The company's products and services include applications and infrastructure offerings. The company's cloud and license business engages in the sale, marketing and delivery of its applications and infrastructure technologies through cloud and on-premise deployment models including its cloud services and license support offerings; and its cloud license and on-premise license offerings. The company's hardware business provides Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management and other hardware-related software to support diverse IT environments.
Proactis Holdings is engaged in the development and sale of business software, installation and related services.
Trimble is a provider of technology solutions. The company's solutions are used across a range of industries including agriculture, architecture, civil engineering, survey and land administration, construction, geospatial, government, natural resources, transportation, and utilities. The company has four reporting segments: Buildings and Infrastructure, which serves architects, engineers, contractors, owners, and operators; Geospatial, which serves customers working in surveying, engineering, and government; Resources and Utilities, which primarily serves customers working in agriculture, forestry, and utilities; and Transportation, which focuses on the transportation and logistics market.
Equity Development enables companies to become better understood and supported by investors. Since our launch in 1996 we have consistently focused on helping our clients improve their communication and relationships with both existing and potential shareholders. Our clients have come from a wide variety of sectors and domiciles, are both private and quoted and range in size from micro-cap to $multi-billions. We offer free access to company research notes written by experienced analysts. These notes include detailed forecasts, financial models and a fair value. We host regular Private Investor Forums at which investors have the opportunity to hear company directors present, and to ask questions. These are free to attend. We broadcast live Webinars with company management that include active Q&A. We also make the recordings available online. We arrange face to face meetings between private investors and company management. We are active users of Twitter, commenting daily on company news, share price moves, Directors’ Dealings, Equity Development Research Notes & Events.
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