Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Elecosoft. We currently have 69 research reports from 6 professional analysts.
Given today’s uncharted waters, it is nice to own resilient, profitable and cash generative stocks. Especially those like BuildTech software developer Elecosoft - sporting a robust balance sheet and generating high recurring revenues (ED 56%). Traits which should not only provide investors shelter from the worst of the COVID-19 storm, but also thrive once this CAT 5 hurricane subsides.
Amino Technologies (AMO): Corp | Elecosoft (ELCO): Corp | Gooch & Housego (GHH): Corp | Ideagen (IDEA): Corp | Intercede (IGP): Corp
Companies: AMO ELCO GHH IDEA IGP
Software stocks that enable corporates to sell more, improve quality, cut costs, save employees time and/or reduce their ‘carbon footprints’ are ideally placed in today’s tech/ESG world. Cue Elecosoft, who said this morning that 2019 PBT would be “ahead of LY” (£3.67m) and “in line with expectations” (consensus £4.1m) - despite being impacted by forex (ED est -2%, weaker SEK vs £) and macro uncertainties (eg Brexit, General Election and subdued Eurozone). We think this is a creditable outcome. Not least because it underlines the resilience of the business - while the results are actually a touch better than our previous (bottom of the range) profit & cashflow estimates, albeit with revenues a smidgeon shy.
dotDigital (DOTD): Corp Interim trading update | Elecosoft (ELCO): Corp FY 2019 earnings on track for growth forecast | eve Sleep (EVE): Corp FY19 pre-close; EBITDA loss/cash burn materially reduced | Hardide (HDD): Corp Placing proceeds to further upgrade equipment | LPA Group (LPA): Corp LED lighting contract win and trading update
Companies: DOTD ELCO HDD LPA EVE
Elecosoft has reported a solid set of H1 2019 results in a challenging market environment. In light of the H1 results, we have reduced our FY 2019 forecasts but maintain our FY 2020 EBIT and EPS expectations. In H1 2019, revenue grew +20% to £12.7m (+22% at constant currencies), adj. EBIT grew +17% to £2.2m, and FCF was flat at £2.1m. Operationally, ELCO has made good progress in H1 with the latest release of core solution Powerproject XV; a UK government listing on the G-Cloud 11 framework; and evidence of increased cross-selling including by the recently acquired Active Online. We continue to expect that ELCO can benefit from the growing adoption of Building Information Modelling (BIM) within the construction industry, as ELCO is already established with excellent brands and has the opportunity to increase the cross-selling of its products. In light of the limited changes to our FY 2020 EPS forecast, we maintain our TP, and look for enhanced delivery by ELCO in H2. At 76p and on FY 2020 estimates, ELCO trades at a PE of 16x and 1% dividend yield.
In the 1999 sci-fi hit ‘The Matrix’, the movie portrays a world when humans live in a computer generated universe. Two decades on, a similar virtual reality is being created across the infrastructure, construction & real estate industries – facilitated by innovative new BuildTech software.
DX (DX): Corp Well on the road to recovery | Elecosoft (ELCO): Corp Strong H1 growth in a challenging environment | Europa Oil & Gas (EOG): Corp Irish exploration to be phased out? | Flowtech Fluidpower (FLO): Corp Interim results, weaker H2 trading expected | InnovaDerma (IDP): Corp FY 2019 finals – a solid base for future growth
Companies: ELCO EOG FLO IDP DX/
Elecosoft (ELCO): Corp First half meets expectation | Europa Oil & Gas (EOG): Corp Frontier Exploration Licence award | Evgen Pharma (EVG): Corp Patent update – European grant |Kazera Global (KZG): Corp Update for NTI tantalite mine | Shield Therapeutics (STX): Corp Interim results – looking to the US and full H2H data
Companies: ELCO EOG STX KZG EVG
GARP investing is all about buying quality secular growth companies at reasonable prices. Hence investors should be able to own them for long periods, and (hopefully) enjoy years of healthy returns thanks to strong EPS and multiple expansion. Enter BuildTech software developer Elecosoft, who said this morning that trading is “in line expectations” - with H1 revenues jumping 22% in constant currency terms (20% reported) to £12.7m (ED est), EBIT margins similar to H1’18 (ie 16.6%) and net debt closing June at a modest £0.6m (or 0.1x EBITDA) vs £2.1m in Dec’18.
Byotrol (BYOT): Corp FY trading update | Chariot Oil & Gas (CHAR): Corp Anchois satellites CPR | Elecosoft (ELCO): Corp A good first quarter in line with expectations | Robinson (RBN): Corp Positive AGM trading statement | Velocity Composites (VEL): Corp Encouraging trading update, resumption of forecasts
Companies: BYOT CHAR ELCO RBN VEL
Building technology businesses is a bit like designing Formula 1 racing cars. Deciding which parts to create in-house, which to ‘buy & build’, and then importantly fitting them all together to accelerate top line growth and generate synergies. Well, after the Shire Systems and Active Online acquisitions last year, we believe Elecosoft, a specialist developer of BuildTech software, is on track to achieve all three. Indeed, in this morning’s trading update the company said it had made an “encouraging” start to 2019, with Q1 revenues up 20% (22% constant currency).
Induction Healthcare Group plc—a healthcare technology company focused on streamlining the delivery of care by Healthcare Professionals looking to join AIM. Expected raise of £14.58m at 115p, market cap of £34.07m. Expected 22 May 2019. SDX Energy plc—a North Africa focused oil and gas company, announces its intention to complete a Canadian plan of arrangement under section 192 of the Canada Business Corporations Act and will have shares de-listed from the TSX-V and admitted to trading on AIM. Expected 28 May 2019, anticipated market cap of £76m Renold plc—a leading international supplier of industrial chains and related power transmission products, announced that it will cancel the listing of the Company from the premium segment and apply for admission on AIM. Expected 06 June 2019. Alumasc Group plc, the premium building products, systems and solutions group, has announced its intention to move from the Premium Segment of the main market to AIM. Expected market cap of £33.4m. Expected 25 June 2019
Companies: ARW BKS CHAR PEG TPX MIRI BYOT VRS SECG ELCO
The multi-national construction software and digital visualisation developer and supplier has defied Brexit fears to deliver another strong year, showing both organic and acquired growth. FX fluctuation meant its overseas sales were slightly below our forecast, but stronger margins from operational gearing led to a comfortable beat on the earnings front. The cash conversion remains excellent and the solid 0.7p dividend is in line with our forecast. The H2 acquisitions left £2.1m net debt at the YE; however, given the reliable FCF we expect that to be paid up quickly with no dividend impact. Operationally, the additions of ShireSystems and ActiveOnline extend the portfolio along a building’s lifecycle from planning and construction into facilities management and further into interior design. ELCO offers a ‘BIM’ software suite to bring together the many different stakeholders in a construction. BIM processes are being widely adopted in the UK (mandatory for government construction) and globally. ELCO is well positioned to ride this wave of adoption, benefiting from cross selling into regional markets where it is already established with excellent brands. We take the opportunity to reiterate our FY 2019 and introduce FY 2020 forecasts; we also lift our TP to 93p on the back of these strong results and expect a re-rating.
Since the Federal Reserve’s volte face on interest rates in December, most large cap equity indices have bounced back to near all-time peaks. The sharp rebound though hasn’t yet fully filtered through into AIM, where many tech stocks remain little changed from their yearend lows. Nonetheless, we believe this situation should rebalance in 2019 as risk appetite improves, especially for quality names that continue to deliver impressive returns.
In light of the fears over Brexit, US/China trade tensions and slowing Eurozone growth, it’s not surprising that even the highest quality stocks have been ‘thrown out with the bathwater’ during the recent correction. However for risk-tolerant investors, volatility creates opportunity, particularly for those top notch businesses enjoying wide ‘economic moats’, long term tailwinds and priced at attractive levels.
Research Tree provides access to ongoing research coverage, media content and regulatory news on Elecosoft. We currently have 69 research reports from 6 professional analysts.
|07Apr20 07:00||RNS||Trading update|
|16Mar20 17:38||RNS||Holding(s) in Company|
|16Mar20 17:34||RNS||Holding(s) in Company|
|21Jan20 07:00||RNS||Year End Trading Update|
|16Jan20 07:00||RNS-R||Launch of new AI visualisation tool|
|20Dec19 15:14||RNS||Issue of Equity|
|18Nov19 08:15||RNS-R||Award Win|
Seeing Machines Limited has announced that it has won a pre-production license deal with a major Automotive Tier 1 partner. This has been entered into under the terms of a pre-existing non-exclusive Collaboration Agreement to provide Seeing Machine's Driver Monitoring System (DMS) technology for an ongoing Automotive programme. For this Seeing Machines will receive a non-refundable pre-production license fee of US$5m before 30 June 2020, in addition to future volume based royalty payments for the above mentioned Automotive programme. Seeing Machines will retain all intellectual property rights associated with its DMS technology licensed to the counterparty under the Agreement.
Companies: Seeing Machines
Bango has announced the expansion of its strategic relationship with NHN Corp, the Korean big data giant. NHN is investing £6.5m to take a majority interest in the Audiens business, owned by Bango. For its investment NHN gains a 60% stake in Bango Deep, the Bango subsidiary which owns the Audiens Customer Data Platform (CDP). NHN will inject its data science technology into Audiens to grow it into a world leading CDP. In addition, NHN has also subscribed for 3.5m new ordinary shares in Bango – 4.7% of the group’s existing ordinary share capital. Bango paid approximately £4m for Audiens. NHN is paying £6.5m for 60% of that business. We revise estimates following the announcement to reflect that Audiens will no longer be fully consolidated in Bango’s accounts. We believe the deal validates Bango’s investment in Audiens and represents a significant vote of confidence in both the data monetisation business and in Bango itself, by a highly successful commerce leader.
In a remarkable coup for Bango, Korean technology leader NHN Corp is taking control of the Audiens Customer Data Platform (CDP) business by investing £6.5m for a 60% stake in the holding company, Bango Deep Ltd, with a view to scaling up Audiens through support and technology into a truly world-class CDP provider. NHN is further securing and deepening its relationship with Bango itself by taking 3.5m Bango ordinary shares (4.7% of the expanded Bango) for £3.2m. This is an excellent deal for Bango, sealed at a time of restricted travel and tightened commercial prospects and possible only because Bango is already partnered, and trusted by the Korean technology giant. The deal takes a non-core, near-breakeven business off the Bango P&L and sharpens management focus, while maintaining a substantive interest in what – now backed by NHN’s cash, expertise and data technology – should become a major global player in the lucrative, high-growth CDP market. On top of this, Bango strengthens its balance sheet with a cash injection and the strategic partnership between NHN and Bango itself is substantively deepened. We adjust our FY 2020 forecast for the change in Audiens accounting status and the cash injection, and highlight the value.
The Coronavirus pandemic is a human tragedy of vast proportions – as well as the terrible human toll, COVID-19 has led to economies across the globe going into physical lockdown and financial freefall. Entire populations are adapting to the “stay at home” edict, to safeguard the vulnerable – and some of these changes will lead to long-lasting or perhaps permanent changes in the way we live or work. This note describes some of our client companies whose business models are well adapted to these changes, or who might see a change in long-term structural demand.
Companies: AMO BGO FDM GAMA KAPE LOOP TERN ZOO
The company announced several appointments that have strengthened the management team after seven acquisitions over the past two calendar years. We believe this investment in management should form a strong foundation for the company’s next phase of growth. Alex Siffrin, the company’s largest shareholder, has stepped down from the board to focus on personal priorities
Companies: Centralnic Group
CentralNic's business is resilient in the current environment. The company has mostly repeatable revenues and sells mission-critical products, diversified across many customers and countries. Market growth is robust, benefiting from the recent surge in online activity and regulated price increases. Competitively, the company is well positioned, dominating its core markets. Financially, the company has adequate financing and has not experienced any increase in late payments. CentralNic’s resilience is reflected in a confident trading update this morning.
Companies: Centralnic Group
A strong interim period to January 2020 delivered the expected £26m revenue as reported in the February trading update, with a 31 January net cash balance also of £26m – EBITDA of £5.6m (post IFRS16), and adjusted PBT of £4.6m highlighting a strong performance. The Group has unchanged strategic ambitions – organic growth and M&A, both in evidence in Rail Technology & Services (RT&S) with 13% organic growth and the post period end acquisition of iBlocks. We withdrew forecasts last week due to the impact of COVID-19 on the 2H-weighted Traffic & Data Services business, given the exposure to cancelled large scale summer events, and uncertainty over traffic surveys; however, the potential for the Group is unchallenged when the world normalises. New contract wins, new product launches, new acquisitions and a hearty balance sheet continued to offer significant upside in 1H and post period end. Target price 900p remains based on our FY21 forecasts, which in theory should be consistent with previous forecasts and we look forward to reinstating numbers when the virus dust settles.
Caledonia today announces that it has taken the prudent decision to defer its approval for the payment of the second quarterly dividend (7.5c/sh - $0.9m - 7% of declared Caledonia cash). The Blanket mine in Zimbabwe remains in operation (at a slightly reduced capacity to secure Covid-19 social distancing) and the mine site remains well-stocked with supplies, so despite the current difficulties getting supplies from South Africa production at the mine can continue for some time to come; 2-3 months in our opinion, if the supply chain from South Africa ceased altogether. Touchstar is a supplier of mobile data computing solutions and managed services to a variety of industrial sectors. This morning, the group has released an update in light of COVID-19. The Board reports that it has taken swift action to re-engineer processes to adhere to government guidelines, whilst maintaining client service levels. Q1 2020 trading is reported to have been ‘broadly' in line, with revenue growth of 40% from continuing operations and outstanding orders to ship to customers in the coming months. Q1 was cash neutral, which follows on from the RNS on 5 February, of a net cash position of £849k as at 31 December 2019.
Companies: Caledonia Mining Corporation Plc Com Shs Npv Touchstar
The FY19A results show both very strong growth in recurring revenues. These recurring revenues now form a substantial majority of Group sales. This transition in the business model reduces reliance on lumpy hardware sales and helps de-risk the investment. The macro environment lends caution but Corero is in its best shape for years.
Companies: Corero Network Security
As noted in the trading update, H1 was in line with expectations. It highlighted that this year will be particularly H2-weighted, with £8.8m sales in H1 delivering a small Adj. PBT. The expectation of a record H2 is underpinned by substantial annual contract renewals from licences signed in H2 LY; strong visibility on new contracts due to initiate in H2; and a significant pipeline of new business in negotiation with existing clients who continue to derive substantial benefits from D4t4’s data management solutions. We reiterate our FY forecasts and TP.
Companies: D4T4 Solutions
FIH's year end update this morning reveals an inline performance in the year to March 31st 2020, notwithstanding disruption over the past six weeks, and also updates on the respective likely effects of Covid-19 on its three business streams, with greater relative resilience seen in the Falklands business and bigger impacts already apparent on the two UK-based businesses, not surprisingly. We note that PTY, in line with requests to companies from the FCA and FRC, is formally delaying its results announcement for FY2019A (year to December), which would in the normal course of events have been published today. A new release date will be issued in due course. Re 2019, the company highlights its update from January indicating inline P&L performance in FY19A combined with good progress on cash resulting in an anticipated net positive cash situation at the year end.
Companies: FIH Group Parity Group
WANdisco recently confirmed that its Fusion product is on track for full availability with Microsoft ‘in the next few weeks’. In this audio clip CEO David Richards describes the commercial implications of this and how the business is navigating the challenges of COVID-19. WANdisco’s proprietary replication technology enables its customers to solve critical data management challenges created by the shift to cloud computing. It has established partner relationships with leading players in the cloud ecosystem including Amazon and Microsoft.
Bango has announced FY 19 results in-line with the December-19 trading statement and our forecasts. The business has grown strongly throughout the Brexit hiatus, notably FY 19 saw the key End User Spend (“EUS”) metric double once again to £1.1bn. With the global macro-economic situation continuing to be impacted by the Coronavirus, we believe market attention will focus on the outlook. The release confirms that Bango has no supply chain dependencies, its products are available without interruption. Furthermore, management has re-iterated its expectation for continuing exponential growth in EUS. We maintain FY 20E estimates following the release and will revisit as visibility on “stay at home” behaviour improves.
Yesterday’s trading update confirms that IQE’s FY19 results will be in line with the revised guidance it provided in November when the full extent of the impact of the US-China trade war became visible. We have cut our FY20 revenue estimate by 6%. In IQE’s case the impact of COVID-19 on global handset demand is likely to be softened by gaining share in both the wireless and photonics markets. However, the full effect of the pandemic on the global economy and IQE’s business remains to be seen.
FY 2019 results will be released next week but this update reveals they are in line with forecasts. The supply-side issues of COVID-19 are easing and have been well managed with minimal disruption; however, the global shutdown for an indefinite period brings material uncertainty to FY 2020 demand across all divisions and QXT has withdrawn guidance pending greater visibility. Prudently, the dividend will also be paused this year. Nevertheless, we are confident that QXT remains well managed, with a strong business model and a healthy pipeline of prospects. Underpinned by $17.7m net cash and a property-rich balance sheet, the long-term opportunity for QXT remains robust. In fact, COVID-19 pressure may be a catalyst for increased outsourcing across the Electronic Gaming Machine (EGM) industry.