Building A Smarter Future
Delivering infrastructure projects on time, to-spec and within budget has proved a mine-field for corporates & politicians alike. Typically, 80% are late and 40% over-spent with little thought on how best to manage the asset once complete - not exactly ideal! Luckily things are changing...and fast. Technologies such as data analytics, IoT, VR/AR, robotics & artificial intelligence, are transforming the $8 trillion global construction market. In turn helping to drive strong demand at Elecosoft (ELCO), a leading BIM (Building Information Modelling) software developer.Nor has M&A been too far behind either, with many deep pocketed rivals (eg JLG Technology, Bentley, Nemetschek, RIB Software, Autodesk, Trimble, Hexagon, Dassault & Oracle) hovering up competitors at often hefty premiums.
Together this has created a ‘virtuous circle’ for ELCO shareholders of improving results, rapid growth, robust visibility and future ‘take-out’ possibilities, as the firm becomes one of the few remaining sizeable, pure-play BIM experts left standing.
In terms of results, ELCO posted 2017 turnover up 12.4% to £20.0m (split 4% LFL, 4% forex & 4% acquisitions), EBIT margins of 13.9% (12.4% 2016), 102% cash conversion and a 50% hike in the dividend to 0.6p (yield 0.8%). The balance sheet is ship-shape too, closing December 2017 with £1.0m of net cash.
For 2018, we expect more of the same on the back of 8% higher revenues (£21.6m) – split 7% H1 & 9% H2. Leading to a 21.4% jump in adjusted EPS (20.2% LY) to 3.5p, as the benefits of operating leverage and 30%+ EBITDA drop-through rates kick in.
A view consistent with today's trading update: like-for-like top line growth accelerated from 4% in 2017 to 7% (constant currency) during the 1st 4 months. Translating into “significantly higher PBT than last year, and [being] comfortably in line with market expectationsâ€.
Even after its recent appreciation, the stock is still not expensive. Trading on EV/sales and PEG ratios of 2.5x (vs peers on 5x) and 1.0x (1.6x) respectively, whilst being 15% below our 85p/share valuation.
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.
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.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.