‘Enormous potential’ as BuildTech blossoms
Clarity of thought and simplicity of message are two vital components of any strategy. This morning, together with releasing ‘in line’ 2020 results, BuildTech software developer Eleco revealed its new ‘client led’ (vs product before) growth plan. Explaining how over the next 3-5 years, it aims to not only accelerate LFL revenues towards market norms (c.10% pa), but also deliver healthy profit margins and cash conversion. Not unambitious targets considering its transition to an ARR model from 56% today (53% 2019), alongside the challenges posed by rivals Autodesk, Nemetschek & Bentley Systems.Moreover, there are several ‘hot spots’ where the business’ software is perfectly suited. Namely data centres, smart factories, online warehouses and connected ‘Home &/or Build-to-Rent’ – often taking on the key project ‘control room’ role. In fact if successful, we think there is every chance that Eleco could actually surpass its own stretching goals in due course.
Meaning that for investors the upside potential could be significant, since little of this appears to be factored into the shares (see below), which trade on 2.9x 2021 EV/revs and 10.5x EV/EBITDA vs 9x & 26x for peers.
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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