Report

'Strong' start to the year

There is nothing wrong with banking a few profits after a parabolic move, especially when a stock becomes disproportionately large within one’s portfolio. Yet for Elektron, based purely on the fundamentals, we believe this would be a mistake despite the stock’s >5-fold rise since the 2017 lows.
Indeed, this morning the company said that Bulgin was continuing to experience buoyant demand, with YTD performance ahead of plan. Supported by a ‘record orderbook’, driving H1 expected sales up at least 8% LFL to £13.5m (LY £12.5m).
Accordingly, we have increased our FY19 turnover and EBIT forecasts for the division to £27.5m (vs £27.3 LY) and £6.9m (£7.2m) respectively. Elsewhere, EET is making good progress too, and tracking full year estimates. While Checkit is in “advanced discussions” with several global businesses to adopt its disruptive technology.
From a macro risk perspective, we understand Elektron has minimal exposure to the recently proposed ‘US-EU/Chinese’ trade tariffs, even though c.64% of revenues are generated outside the UK. Instead there may actually be a small positive forex benefit given $ appreciation vs the £ (6%) and Tunisian Dinar (10%) over the past 2 months.
So what does this all mean? Well, in terms of the group our FY19 EBIT climbs from £2.0m to £2.3m – which in turn pushes the sum-of-the-parts (SOTP) valuation 2p higher to 62p/share.
Underlyings
Accesso Technology Group

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.

Asure Software Inc

Asure Software is a provider of cloud-based Human Capital Management (HCM) software and services. The company's HCM suite, named AsureHCM, includes cloud-based Payroll and Tax, Human Resources (HR), and Time and Attendance software as well as HR Services ranging from HR projects to outsourcing payroll and HR staff. The AsureHCM suite includes product lines: AsurePayroll and Tax, which is a cloud-based solution that provides an application for the company's clients' digital HR; AsureHR, which handles HR activities including employee self-service; AsureTime and Attendance, which provides cost savings and ROI gains; and AsureHR Services, which allows the company's clients to run their businesses.

Autodesk Inc.

Autodesk is a design software and services company. The company is engaged in 3D design, engineering and entertainment software and services. The company's product offerings include: AutoCAD, which is a customizable and extensible CAD application for design, drafting, detailing, and visualization; AutoCAD Civil 3D, which provides surveying, design, analysis, and documentation solution for civil engineering; CAM Solutions, which is a computer-aided manufacturing software that provides solutions for computer numeric control machining, inspection, and modeling for manufacturing; and Inventor, which provides tools for 3D mechanical design, simulation, analysis, tooling, visualization, and documentation.

Blue Prism Group Plc

Blue Prism Group is a global software company. Co. is engaged in Robotic Process Automation which enables blue-chip organizations to create a digital workforce powered by Co.'s software robots that are trained to automate routine back-office clerical tasks. Co.'s enterprise-grade software enables the automation of manual, rules-based, administrative processes. Co. is engaged in licensing, which involves the provision of software licenses, where the agreement is established of a legally binding contract between Co. and its customers. Co. is also engaged in services and training, where the customer requires consultancy or training on a project by project basis.

Checkit

Elektron Technology is a global business that designs, manufactures and markets products that connect, monitor and control. Co. has three business segments: Bulgin, which products are sealed connectors for the demanding environments, and custom product and system development; Instrumentation, Monitoring and Control, which key products are ophthalmic instruments, nanopositioning and sensing equipment, and materials testing equipment; and Checkit, which key products are cloud-based work management software based on interactive checklists, and smart wireless sensors for continuous automated monitoring.

Craneware

Craneware is engaged in the development, licensing and ongoing support of computer software for the U.S. healthcare industry. Co.'s solutions span four product families: Patient Engagement, Charge Capture & Pricing, Revenue Collection & Retention, and Cost Analytics. The patient engagement segment provides: medical necessity & prior authorization, and patient responsibility. The charge capture & pricing segment provides procedures, pharmacy, and supplies. The revenue recovery & retention segment provides billing & claims analysis, audit management, and denials management. The cost analytics segment provides cost of care.

Crimson Tide

Crimson Tide is a holding company. Through its subsidiaries, Co. is engaged in the provision of mobility solutions and related software development. Co. also provides management and support to other group companies.

Ideagen

Ideagen is a supplier of information management software to regulated industries. Co. supplies Governance, Risk and Compliance solutions principally to the Healthcare, Transport, Aerospace & Defense, Life Sciences, Manufacturing and Financial Services sectors.

Salesforce.com inc.

Salesforce.Com is engaged in customer relationship management technology. The company's Customer 360 is an integrated platform that unites sales, service, marketing, commerce, integration, analytics and more to give companies a single, shared view of their customers. Through its platform and other developer tools, the company also enables third parties to develop additional functionality and applications, or apps, that run on its platform, which are sold separately from or in conjunction with the company's service offerings. The company's cloud service offerings include sales cloud, service cloud, marketing and commerce cloud, and salesforce platform and other.

ServiceNow Inc.

ServiceNow provides enterprise cloud computing services that define, structure, manage and automate digital workflows for global enterprises. The company markets its services to enterprises in a variety of industries, including consumer products, education, financial services, government, health care, information technology (IT) services and technology. The company sells its subscription services through direct sales and, to a lesser extent, through indirect channel sales. The company also provides a portfolio of personnel and other services, both directly and through its network of partners. The company's products include IT service management, IT operations management, IT business management, and security operations.

Strix Group

Strix Group is a holding company. Through its subsidiaries, Co. is engaged in the designing, manufacturing and supply of kettle safety controls and other components and devices involving water heating and temperature control, steam management and water filtration. Co.'s core products are kettle safety controls, which are responsible for disconnecting the power to the heating element when either water has boiled, operated with no water present, or in some products when the kettle is lifted off its base.

The Ultimate Software Group, Inc.

Veeva Systems Inc Class A

Veeva Systems provides industry cloud solutions for the life sciences industry. Veeva Commercial Cloud is a suite of multichannel customer relationship management applications, a commercial data warehouse, territory allocation and alignment applications, master data management applications and customer reference and data and services. Veeva Vault is the company's suite of cloud-based, enterprise content management applications that address the content management requirements for the company's customers'commercial functions, including medical and sales and marketing, and key research and development functions, including clinical, regulatory, quality, and, when available, safety.

Workday Inc. Class A

Workday is a provider of enterprise cloud applications for finance and human resources. The company's products include: Workday Financial Management, an application with financial capabilities, analytics and metrics, and auditable process management; and Workday Human Capital Management, which includes global human resources management (workforce lifecycle management, organization management, compensation, absence, and employee benefits administration) and global talent management (goal management, performance management, succession planning, and career and development planning). The company's other solutions include Adaptive Insights Business Planning Cloud, as well as Workday Data-as-a-Service.

Provider
Equity Development
Equity Development

​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.

Analysts
Paul Hill

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