ARR climbs 8% LFL, with YTD PBT in line with ests
Eleco is transitioning into a highly cash generative & profitable SaaS winner. April YTD recurring revenues have climbed 8% to £5.4m (vs £5.0m LY) - representing approx. 60% of group sales vs 54% LY.As anticipated, this growth was offset by a similar decrease in software licenses/services. Hence total turnover at £8.9m was flat in constant currency terms, & slightly down (4%) vs LY’s £9.3m - reflecting forex headwinds (eg SEK - £).
Equally though, April YTD adjusted PBT is tracking our £2.9m target, even after factoring in further ‘growth’ investment for later in the year. Elsewhere net cash closed April at a healthy £11.3m (or 13.5p/share vs £10.0m Dec’21), providing ample firepower for future M&A.
We have prudently held our adjusted PBT target of £2.9m, but shaved FY22 revenues by 2% to £27.0 (vs £27.6m B4), along with the valuation 6% to 141p/share (150p) due to sector wide multiple compression.
We think the stock is significantly undervalued based on both fundamentals and in relative terms. Trading on 2.3x 2022 EV/revs and 10.1x EV/EBITDA vs 5.7x & 17.5x for peers and implying potential upside on a rerating of >50% for patient investors.
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.
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