Behind every successful company..
eg solutions is a leading provider of software solutions which improve the efficiency of the corporate back office: it already provides industry-leading workforce optimisation solutions for c. 50 global brands and over 100,000 users worldwide.
The company extended the functionality of its product suite this year to enhance its appeal to a large, loyal client base which already included leading financial services, utilities, telcos and business process outsourcers. New management and sales teams have embarked on an energetic marketing push, already reflected in growth in the order book (recurring revenues) from £6m in 2013 to £17.1m currently.
A recent update confirmed that adjusted FY14/15 pre-tax profit will be breakeven, in line with forecasts. It will be achieved on lower than anticipated revenues as certain sales under negotiation will now complete early in FY 16/17, but it added another 11% to the order book since September. Significant new business this year include new utilities verticals, first wins in telecoms and Local Government, and the insurance division of a challenger bank. Net cash at end January was £3m.
The shares at 53p are trading materially below our view of intrinsic value at c. 100p/share, supported by a growing order book and increasing evidence that new management can access the full potential. The valuation assumes that operational leverage inherent in the financial model translates into a step up in profit/EPS on the back of revenue contributions from a growing order book, which provides three to four years' visibility.
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