Eleco Plc

Ticker: ELCO Exchange: AIM

Eleco Plc (formerly known as Elecosoft) is a developer of on-premise and Cloud/SaaS software for the Architectural, Engineering, Construction and Operator (AECO) and digital marketing industries. Its award winning 6D solutions (>100,000 users) cover project planning, estimating, design/CAD, visualisation, site operations and Building Information Management (BIM).

Latest Reports

Eleco Management Interview

Published: 24th September 2020

Jonathan Hunter, Interim CEO, discusses with Paul Hill a resilient first half performance and exciting outlook for a BuildTech expert like Eleco. 

One of most compelling stocks on AIM

Published: 24th September 2020

The €8bn BuildTech sector is at the heart of the digital transformation of the vast global construction sector. Providing the glue & ‘digital twins’ that bind all the inter-connected ‘property lifecycle’ parts together – eg CAD/CAM (design), project management, visualisation, AI, asset maintenance (operate) and Building Information Modelling.

BuildTech expert Eleco today reported resilient H1’20 sales of £12.2m (-3.9%) and improved operating margins (19.4% vs 16.8% LY), adjusted EBIT (+10.6% at £2.37m) & EPS (+8% to 2.2p) thanks to tight cost control.

This was achieved amidst challenging conditions and underpinned by 56.9% recurring revenues (maintenance, support & SaaS) vs 53.2% LY. Helping to offset an estimated 5-10% drag (ED) on LFL growth due to the pandemic.

Net cash closed June at a healthy £4.4m, worth 5.3p/share, yet total R&D investment (incl £760k capitalised vs £491k amortised) still climbed +6.5% to £1.62m.

To us, Eleco possesses all the hallmarks of a high margin, cash generative software business, which serves a host of blue-chip clients across a range of overseas territories with best-in-class technology.

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You can't keep a good business down

Published: 14th July 2020

Elecosoft reported that, although H1’20 turnover dipped slightly to £12.2m (-4% vs £12.7m LY, -3% constant currency) due largely to COVID-19, adjusted PBT climbed 14% to £2.23m (£1.96m LY, or +23% reported £1.93m vs £1.57m LY). Boosted by favourable operating leverage, lower costs and higher EBIT margins - as tradeshows were postponed and less money was spent on travel & other discretionary items.

Encouragingly, net funds closed June at a robust £4.4m (worth 5.3p/share) vs £1.1m Dec’19 – up £3.3m in just 6 months (est. 139% cash conversion) - thanks to tight working capital management (re debtor days at pre COVID-19 levels) augmented by deferred tax payments. Providing plenty of liquidity to weather even the most extreme of possible 2nd infection waves, and optionality (re M&A) if potential acquisitions ever become available at attractive prices.

Furthermore, the outlook is improving with our stab-in-the-dark ‘guesstimate’ being that June saw positive LFL sales, assisted by the ongoing digitisation of the construction industry, launch of the new AI visualisation tool (eg Karndean) and North American expansion (eg US paint manufacturer Benjamin Moore).

In terms of valuation, the stock at 78p is attractively priced: trading on 2.4x 2019 EV/sales compared to typical industry multiples (pre COVID-19) of 4.0x – 7.0x. With the two closest rivals, Nemetschek & Autodesk, presently priced at >10x EV/turnover.

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Profits jump 25% April YTD

Published: 4th June 2020

Elecosoft have reported that although revenues declined 3% April YTD (2% constant currency: ED estomated split -14% month vs +2% Q1’20) PBT had jumped an impressive 25% YoY – as tradeshows were postponed and less money was spent on travel, hotels, marketing & other discretionary items.

Altogether, lifting year-to-date EBIT margins to circa 21% (ED estimate) vs 16.8% H1’19, and closing April with net cash of £3.1m, vs £1.1m in Dec’19.

Customers are also accelerating their own adoption of cloud & SaaS applications. Which in turn, helped to drive ELCO’s recurring revenues (re maintenance, support, SaaS) 6% higher April YTD, representing approx. 59% of the group (vs 56.8% FY19).

Looking ahead, given the more stable macro environment, we hope to reintroduce our forecasts and valuation - either in September at the interims, or perhaps at the H1 trading update in late July.

The stock at 77p appears attractively priced - trading on 2.4x 2019 EV/sales compared to typical industry multiples (pre COVID-19) of 4.0x – 7.0x. With the two closest rivals, Nemetschek & Autodesk, presently priced at >10x EV/turnover.

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Beneficiary of the new digitalised world

Published: 11th May 2020

Today the Board reported in line 2019 results. Delivering revenues up 14% (est. 3% LFL) to £25.4m (£22.2m LY), despite adverse forex (ED -2%, weaker SEK vs £) & other macro headwinds (Brexit, General Election & subdued Eurozone). Growth was split evenly across the UK +15% (£9.4m) & abroad +14% (£16.0m), with sales/head nudging up 3.8% to £101.2k (£97.5k).

Both 89.5% gross profit margins and positive operating leverage (32.9% EBITDA drop through rates) allowed R&D (£3.1m vs £2.8m LY) to be increased (12.2% turnover), of which £1.2m was capitalised (£1.0m). Likewise, adjusted EBIT climbed 15.0% to £4.5m (17.9% margin vs 17.8%), EPS +7.1% higher to 4.10p (3.82p) and net funds ended Dec’19 at £1.1m vs -£1.8m LY, reflecting 120% cash conversion (114%).

Elecosoft continued to trade “well” in Q1’20, with results only marginally impacted towards the end of March. Since then there has been a “degree of disruption”, particularly with regards to face-to-face services (19% sales). However we believe this will lessen over the next couple of quarters, setting up for a powerful rebound in 2021.

In fact many housebuilders, for instance Mace, Taylor Wimpey, Vistry & Persimmon, are planning a phased reopening this month under new government guidelines. And the construction industry, traditionally slow to embrace new technology, is now accelerating its adoption of ‘everything digital’.

Given the comfortable cash position, high retention rates & recurring revenues (57%), Elecosoft should provide a welcome port for risk tolerant investors to anchor in whilst the worst of the COVID-19 storm subsides. The stock at 74p looks attractively priced, trading on 2.4x 2019 EV/sales compared to typical industry multiples pre COVID-19 crisis of 4.0x – 7.0x

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Long term winner in new social distancing world

Published: 7th April 2020

Today Elecosoft reports that 2019 turnover and adjusted PBT were “significantly higher(ED £25.3m & £4.1m) than last year.  With a robust balance sheet and high recurring revenues, they're well placed to cope with the uncertainty introduced by COVID-19.  

Results have seen a marginal impact towards the end of Q1, and given the uncertainty of timing, the Board has decided to suspend the final dividend, and remove any indications of future performance from today’s pre-close statement.  

In terms of valuation, the stock is attractively priced for patient risk tolerant investors - trading on a trailing EV/Sales multiple of 1.6x (see below) compared to typical industry multiples pre COVID-19 crisis of between 4.0x – 6.0x.

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At the intersection of AI and BuildTech

Published: 21st January 2020
2019 proved to be challenging period for many corporates, with S&P500 EPS growth set to climb just 0.2% YoY ($162/share). Even the poster child of the tech world, Enterprise Software (ES), hit a pot-hole, limping along at a comparatively modest 8.5% to $456bn (source: Synergy Research) vs 13.5% for 2018.

However C-suite confidence is returning, with Gartner predicting the ES market will accelerate back up to normal cruise speed (ie +10.5% to $503bn) this year.

Encouragingly too, Elecosoft 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.

Consequently, we have tweaked our 2019 numbers to: EBIT of £4.40m (margin 17.5%) on turnover up 14% to £23.35m (3% LFL CC) with net cash closing Dec’19 at £1.50m (vs -£1.81m LY). Going forward, the 2020 PBT & EPS targets remain unchanged at £4.6m and 4.5p respectively, notwithstanding a further small forex headwind of c.-1% (£’s recent rise vs $/€).

Elsewhere, our valuation inches up from 100p to 105p/share - reflecting the improved economic climate, new product launches (eg AI visualisation tool), stabilisation in the SEK and significant future up/x-selling opportunities.
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1st class software, customers and cashflows

Published: 23rd September 2019
Nowadays almost every organization is moving up the tech-curve, with the aim of transforming productivity, communication and products/services, whilst equally helping to enhance their customers’ operations.  
Enter Elecosoft, whose proprietary BuildTech software materially improves the whole property life-cycle (eg 75 years). Starting from digital design, project management and visualisation, right through to ongoing repairs and support. Not only saving clients (eg builders, operators and landlords) time, money and resource, but also reducing their carbon footprints. 
Better still, the company is expanding rapidly, profitable and generating strong cashflows. Here H1’19 cash conversion came in at 118%, with adjusted EBIT climbing 20% to £2.14m (margin 16.8%) on revenues up 20.4% to £12.7m (22% constant currency).

That said, Elecosoft is not totally immune to the economic cycle. Experiencing “some slowing of momentum” of late, reflecting a temporary dip in UK construction, Brexit kerfuffle, global trade wars (re manufacturing) and general weakness in Northern Europe. Indeed, we calculate H1’19 organic growth decelerated to an estimated 2% (vs 5% FY19) – below our previous expectations of 5%. On top, there was a -2% forex headwind due to the devaluation of the Swedish Krona vs £. 
Exec Chairman John Ketteley explaining: “We have experienced some slowing of momentum in some of our markets,… but Elecosoft remains resilient. Much of our software is aimed at delivering ease of use and efficiencies to our customers, to enable them to reduce their own, and their customers costs in difficult markets.” 
Consequently, we’ve prudently trimmed our FY19 turnover and adjusted EBIT forecasts to £25.6m (from £26.4m before) and £4.35m (£4.52m) respectively – alongside nudging down the valuation to 100p/share (vs 115p before), equivalent to c.3x FY20 EV/sales.

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Strong H1’19 and in line with FY19 expectations

Published: 6th August 2019
Almost every organization on the planet is busily trying to digitalize, automate and ‘smart-enable’ its operations. Not only to communicate/understand their customers & employees better, but also transform their businesses, become more efficient and vastly improve the quality of products & services.
The construction & property maintenance industry is no different, yet it has traditionally been slow to embrace this new ‘paradigm’. However things are changing… and fast. 
Here BuildTech software developer Elecosoft said today that trading is “in line FY 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.
What’s more, this encouraging top line growth is higher than our FY19 forecasts of +18.8% YoY (based on 5% LFL CC), and more so given we’d assumed an H2 bias due to tough comparatives and Q2’19 product launches. 
Going forward, we reiterate our FY19 EBIT forecast of £4.5m (margin 17.1%) on turnover of £26.4m, and likewise hold the valuation at 115p/share. Nonetheless, if this momentum is maintained, then there is scope for upgrades as the year progresses.
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Promising start to the year

Published: 8th May 2019
Great companies achieve great things. Take Elecosoft, a specialist developer of BuildTech, asset maintenance and visualisation software. Solutions that deliver substantial benefits for construction firms, architects, contractors and landlords alike - across the entire property lifecycle, particularly in terms of quality, project management, cost, efficiency and time.

This morning the company said it had made an “encouraging” start to 2019, with Q1 revenues up 20% (22% constant currency). This is higher than our FY19 estimates of +18.8% YoY (LFL 5%), and more so given we’d expected a H2 bias - reflecting tougher H1’18 comparisons (7% LFL vs 3% H2), the time required for sales initiatives to take root, and Q2 product launches. In fact, in April there was an important new version (#15) of the group’s flagship PowerProject released, which may have caused a few customers to defer purchases. 

Therefore, considering these mini headwinds we are actually more than pleased with progress - and estimate that in constant currencies Q1’19 turnover might have actually been over 5% LFL, vs our base case of 3%. In turn, pushing Q1 PBT above LY, and “in line with FY expectations” – which allied to strong cash generation (+£1.2m), meant March net debt fell to £0.9m from £2.1m in December.

However given the ongoing macro uncertainties, we have decided to conservatively hold our forecasts and 115p/share valuation, but suspect there may be scope for upgrades in due course.

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2019 sales set to jump 19% after record year

Published: 19th March 2019
Elecosoft is a BuildTech, asset/property maintenance & visualisation software specialist for the Architectural, Engineering, Construction and Operator (AECO) and digital marketing industries. Its award winning 6D solutions (>100,000 users) cover project planning, estimating, design/CAD, visualisation, site operations/maintenance and Building Information Management (BIM). 

This morning the firm posted another record set of numbers, characterised by a 11.1% jump in sales to £22.2m (+5% LFL, constant currency - CC), expanding EBIT margins (17.6% vs 13.9% LY; split 18.4% H2 & 16.6% H1), better than expected PBT (+39% to £3.7m) and robust cash generation (101% conversion, OCF +7% to £4.5m). What’s more, 57% of turnover (+14% to £12.6m) came from recurring maintenance, support and SaaS activities (vs 55% LY; split 58% H2 & 55% H1) – importantly, providing healthy forward visibility, alongside a durable ‘economic moat’ and resilient business model.

Looking forward, we’ve prudently forecast 2019 turnover to climb 18.8% to £26.4m , on the back of mid-single digit organic growth, augmented by the natural flow-through of last year’s M&A. Investors should however be aware that our projections are conservative in light of the buoyant demand for BuildTech - a $6.6bn sector which is predicted to ramp at an annualised 11.3% to 2021 – ably supported too by the $14.5bn asset/property maintenance (8.7% pa) and $4.9bn visualisation (9.5%) verticals. 

The good news for investors is that at 72p, most (if not all) of this upside appears to be in the share price for free. Moreover due to ELCO’s scalability, 90%+ retention rates, favourable operating leverage, attractive EBITDA drop-through rates and international footprint (63% outside the UK) - 2018 adjusted EPS and closing net debt both came in slightly ahead of expectations at 3.9p (+34%) and £2.1m respectively. The latter representing a comfortable 0.45x EBITDA and enabling the dividend (0.9% yield) to be lifted 13% to 0.68p (5.7x covered) and be paid on 31st May, with a script alternative (conversion price 74.72p) available and an ex-div date of 28th March.

Consequently bearing all this mind, we reiterate our adjusted EBIT forecasts for this year (+15.8%) and next (+14.8%) of £4.5m and £5.2m, together with the 115p/share valuation. 
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Disrupting the $10 trillion construction sector

Published: 25th January 2019
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.

Take Elecosoft, whose award winning software is ‘disrupting’ the $10 trillion global construction market. This morning in a positive RNS the firm said that - despite macro uncertainties & adverse forex moves (re weaker SEK vs £) - its 2018 results are set “to be significantly higher than 2017, and comfortably in line with expectations”.

These record numbers being driven by new customer wins, alongside a service-centric approach, delivering high renewal rates and excellent end-user training/support. Moreover, we estimate that recurring revenues (incl SaaS) now account for >55% of the group - providing robust visibility for 2019 & beyond.

Looking ahead, we retain our forecasts (adj 2018 PBT of £3.5m on £22.3m sales) & 115p/share valuation – whilst are also encouraged to hear that the Shire Systems (Jul’18) and Active Online (Nov’18) acquisitions are bedding down nicely and hitting targets. Plus, at 72p the stock (down c.15% over past 4 months) appears cheap vs BuildTech peers across all major benchmarks.  

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€3.45m acquisition of VR/AR visualisation expert

Published: 6th November 2018
Elecosoft is a BuildTech pioneer, developing on-premise and Cloud/SaaS software for the Architectural, Engineering, Construction and Operator (AECO) and digital marketing industries. Its award winning 6D solutions (>100,000 users) cover project planning, estimating, design/CAD, visualisation, site operations/maintenance and Building Information Management (BIM). BIM acts as the oil providing data/info to the various interconnecting modules.

How do the world’s best interior designers create their perfect homes? Talent plays a big factor, however they also use top notch visualisation software to quickly & easily modify a property’s layout, aesthetics and ambiance. Enter ‘Active Online Gmbh’ based in Wesel, NW Germany and employing 29 staff. Its “cutting-edge” software allows consumers & homeowners to do exactly this. Swapping out the furniture, curtains & flooring, alongside changing the décor, wall colours, light fittings, fabrics & windows. All at the touch of a button in rich HD/3D graphics.

Not only can gains be made out of the takeover of Active Online from cost synergies , where we understand ELCO can reduce its 3rd party ‘image scanning’ bills by circa €150k pa, utilising AO’s in-house facilities. But, more importantly, also from integrating the business with its own rival interactive visualisation division ESIGN (10% sales, located 270km away in Hanover) – coupled with cross selling the solutions into each other’s extensive client lists (

All told, to us this looks an attractively priced, earnings accretive (in year 1) and materially value enhancing deal, for a profitable software expert at the forefront of BuildTech visualisation. 

Lastly, this morning’s upbeat announcement reported that the ELCO business “continues to trade in line with its expectations, and its assessment of outlook & the market remains unchanged.” 

Going forward, our 2019 turnover, PBT & EPS estimates have been upgraded to £27.2m, £4.3m & 4.3p respectively vs £24.9m, £4.0m & 4.1p before. Likewise, we have nudged up the valuation from 110p to 115p/share. Or >55% higher than today’s 73p - representing steep discounts vs peers across all key metrics.

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Shire acquisition is 'amazing'

Published: 11th September 2018
Elecosoft is a developer of on-premise and Cloud/SaaS software for the Architectural, Engineering, Construction and Operator (AECO) and digital marketing industries.

‘BuildTech’ software is digitising the entire property/infrastructure life cycle (say 75 years). Covering initial design, build and commissioning, right through to maintenance, repair, upgrade and final demolition. Strangely, though, this seems to have been somewhat overlooked by UK investors, despite the sector expanding at a healthy 11% clip and being worth c. $6bn pa.

This apparent indifference however is not shared abroad, where overseas BuildTech stocks trade on EV/turnover multiples of >5x. In our view, correctly reflecting the software’s outstanding value to end-users. It should only be a matter of time before ratings of similar UK listed peers like Elecosoft catch up. Particularly if the company continues to deliver impressive results, as it did once again this morning. 

H1’18 adjusted EBIT and operating cashflow climbed 33.5% (to £1,755k) and 35.8% (£2,287k) respectively on revenues of £10,554k, up 7% LFL (constant currency vs 5.4% reported). Similarly, underlying EPS rose 38% to 1.8p, the dividend was hiked 40% to 0.28p, EBIT margins widened to 16.6% (13.1% LY) and cash conversion came in at a better than expected 107% (LTM).

Additionally, this organic growth will be enhanced going forward by the transformational acquisition of Shire Systems on 4th July for £5.1m (cash/debt free) - equivalent to modest 2018 EV/revenue, EV/EBIT and PE multiples of 2.5x, 6.5x and 8.0x. Executive Chairman John Ketteley, who is usually pretty reserved, saying that Shire is absolutely “amazing”.

Ultimately, the deal could generate synergies many times higher than the £5.1m price. Clearly this won’t happen overnight, albeit by offering total cradle-to-grave solutions, we believe Elecosoft should be able to churn out double digit top line growth, 20%+ adjusted EBIT margins and 90%+ cash conversion across the cycle. 

So what does this mean with regards to the valuation? Well, based on the astute Shire purchase and substantial prospects ahead – not least, cross/up-selling, expansion outside of Europe and entry into adjacent verticals – we calculate the stock is worth 110p/share (vs 90p before) using a range of benchmarks and 12% discount factor.

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How to profit from the surge in BuildTech

Published: 1st August 2018
How can an outside investor gauge the quality of a company’s software? Speak to experts, test the product, ask clients and/or review industry awards/journals. Elecosoft scores highly on all of these counts - yet to us what really stands out is its customer base.

All told, ELCO’s software is used by >90% of the UK’s top 100 construction firms & 7/10 biggest retailers; 40 of the top 50 Swedish & 14 of the largest German construction groups; 70% of the EU’s flooring manufacturers and 15% of 400 largest US contractors. Generating retention rates of >90% and almost 60% recurring revenues (Support, maintenance & SaaS).

The good news from this morning’s positive trading update, is that the Board are well on track. H1’18 revenues climbed 7% LFL in constant currency (5% post forex headwind) to circa £10.5m (LY £10.0m) with adjusted PBT jumping 45% to £1.45m (LY £1.0m), on the back of favourable operating leverage and continued tight cost control.

Consequently, we reiterate our FY18 sales and EBIT forecasts of £22m and £3.6m respectively. Albeit, note that these are tilted towards the upside, especially given recent £ weakness vs the €/$. Likewise, H1 cash generation was strong, ending June with net funds of £2.6m compared to £1m at the start of the period – equivalent to cash conversion of >105%. Plus, even after last month’s strategic acquisition of Shire Systems for £5.1m (cash/debt free basis), we expect net debt to close Dec’18 at a modest £2.8m, or 0.62x EBITDA.

Similarly, while our top level 90p/share valuation remains unchanged, we once again emphasise that there is possible upside here too. In fact, despite this year’s re-rating, the stock appears cheap vs peers who trade on higher EV/sales, EV/EBIT and PE multiples.

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A 'match made in heaven'

Published: 4th July 2018
Elecosoft is a developer of on-premise and Cloud/SaaS software for the Architectural, Engineering, Construction and Operator (AECO) and digital marketing industries. Its award winning 6D solutions (>100,000 users) cover project planning, estimating, design/CAD, visualisation, site operations and Building Information Management (BIM). BIM acts as the essential lubricant to oil all the connecting parts.

M&A is a bit like ‘panning for gold’. Most prospectors lose money, but the successful ones do the homework, know where to look and crucially understand their markets inside out. Similarly, we think Elecosoft - following its ‘transformational’ £2.4m acquisition of BIM (Building Information Modelling) SaaS provider, ICON back in October 2016 - has done it again. 

Announcing this morning that it has purchased Shire Systems Limited, a leading UK computerised maintenance management software (CMMS) developer based in Southampton, for £5.1m on a cash/debt free basis. Corresponding to modest 2018 EV/sales, EV/EBIT and PE multiples of circa 2.5x, 6.5x and 8.0x respectively - compared to the sector on 3-5x, 15-25x and 20-30x

In our view, today’s acquisition could ultimately generate synergies many multiples higher than the £5.1m price tag. Plus, we understand Shire has an impressive management team, which should assist the integration process, and longer term help shape the future direction of the business as a whole.

Regarding the numbers, Shire delivered normalised PBT of £0.7m in 2017 on turnover of £1.9m – and YTD is tracking at a slightly higher run-rate of £0.4m and £1.0m for Jan-May’18. Consequently, given this and the newly increased debt facility (from £2m to an £8m, 5 year term loan with Barclays Bank), the Board believes the acquisition “will be earnings enhancing in H2’18”. 

As such, we have upgraded our PBT estimates for this year and next to £3.4m (£3.3m before) and £4.0m (£3.8m) – along with lifting our valuation from 85p to 90p/share.

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Building a smarter future

Published: 16th May 2018

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 expectations”.

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.

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