Eleco Public Share Discussion Threads

[edmonda] 12/9/2018 08:37

Good H1 results today: revs +7%, EPS 1.8p +38%, div 0.28p +40% and EBIT margins up sharply to 16.6%.

Updated ED research note with raised fair value now out, freely available here:

[smithie6] 28/8/2018 17:47

I'm not a fan of reading too much into chart signals/shapes...

But this one is showing a clear uptrend after the dip from the previous peak around 90p....with higher lows...slowly..

[smithie6] 24/8/2018 13:48

looking back at the recent Shire acquisition

I note that
- price is <10 x PBT. & < 2.5 x turnover & has a high % profitability wrt turnover so doesnt look expensive

- some words in RNS are good
"significant"
& adds a CMMS product
..so, one assumes that ELCO didnt have such a product before, so that looks like a +ve addition; & one assumes some cross selling opportunities

- decent size client base

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which as a consequence is generating some +ve commentator comments
& firmness in the share price action in recent days/weeks imo

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To copy a Tech. Invest phrase. ;-)
"strong hold"...imho

(what TI think about ELCO at the moment at the current share price ...I have no idea...I havent subscribed for a number of years, but its quite a good/decent tip sheet imo, but its not cheap)

[ansc] 23/8/2018 18:49

Hi, rathkum, I'm just older, slower and but none-the-wiser unfortunately. How's things with you? Thanks for the M F article although it doesn't appear to have sparked much interest so far.

As to my post [623] re a possible sell waiting in the 'wings', sure enough one has appeared (L)ate but which actually went through at 09.43 (coinciding with the time of that mark-down). Used to believe that official AIM guidelines meant bargains could only be delayed where it was thought that the bargain size could disrupt normal market trading; a 15.15k sell hardly falls into that category but then Market Manipulators nowadays seem to be allowed to govern themselves.

[rathkum] 23/8/2018 15:49

ansc- hope all is well with you.

There’s still time to buy these high-growth stocks before they take off.

Undervalued tech play

I’m equally bullish on project management software business, Elecosoft (LSE: ELCO).

After several years of consolidation, City analysts have the company reporting earnings per share growth of 33% for 2018. Personally, I believe there’s a chance the firm could beat this number. In a trading update for the six months to 30 June, published the beginning of this month, management told investors unaudited profit before tax was up 45% year-on-year.

Looking at these numbers, it’s no surprise to me that the stock is trading at a forward earnings multiple of 21. In my mind, this valuation undervalues the business’s potential. Analysts have earnings growing by another 20% in 2019, and that’s before the impact of any acquisitions.

In July, the company acquired Shire Systems for £6.3m to boost its stable of products. And with a net cash balance of £2.3m, I wouldn’t rule out further deals in the months ahead.

Put simply, I reckon it could be time to snap up this hidden gem before the rest of the market catches on.

[ansc] 23/8/2018 11:50

Only two trades recorded today, both buys, yet the price drops ... another large sell in the 'wings'?

[ansc] 22/8/2018 16:28

Confusing price movements today so, to clarify, have just done a couple of online dummy trades (5k); came up with the following ... 82.08/84.5p.

edit: no explanation needed now with the revelation of those two largish (L)ate trade sells.

[smithie6] 17/8/2018 14:14

How come the price is up today ??

[ansc] 16/8/2018 12:53

An unusually tight online quote for ELCO this morning, 78.5/78.95p (for 5k).

[smithie6] 14/8/2018 10:45

...only saw the RNS today

(it is holiday season)

well done ELCO....

[petewy] 07/8/2018 13:01

Thanks Hannahh. Good post. (Crowe?)

[hannahh] 07/8/2018 11:00

Equity development's research note by Paul Hill

"How to profit from the surge in BuildTech"

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.

Read the full note here: hxxps://www.equitydevelopment.co.uk/edreader/?d=%3D%3DQN1QjM

[ansc] 02/8/2018 18:30

No (L)ate trades reported so, as often appears to be the case these days, supply and demand doesn't have much bearing on a sp's behaviour. According to my rough calculations, c. 105.5k shares have been bought today, 47.6k sold yet the price drops by 1p. Mind boggling for this simpleton.

[edmonda] 02/8/2018 15:57

Equity development's research note by Paul Hill

"How to profit from the surge in BuildTech"

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.

Read the full note here ...

[ansc] 02/8/2018 14:24

Updating the share trades marked since 11.24, at 14.09 there's been a further 31.1k 'buys' and 5.0k 'sales' with a 25k '?' at 79p (which must surely have been another buy seeing as there hasn't been any sales at that kind of price since 11.24). I wonder how the Market Manipulators have managed to hold the price steady, are they working a large sale order? Time will tell.

[ansc] 02/8/2018 11:57

The chairman states that profit before tax, on a 5% turnover increase, is up 45% for the half year which by my reckoning makes it £1.46m; the profit before tax for the whole of 2017 came in at £2.254m. How much more were 'sellers' expecting/wanting?

[ansc] 02/8/2018 11:40

The mysteries of market making. As at 11.24, marks of 73.3k for 'buys', 42.6k for 'sales' and the share price response .....marked down 2.5p!

[ansc] 01/8/2018 18:38

No sign of a trading update (last year released on the 17th July) so it's understandable that some investors have become spooked by the delay and headed for the exit - eight sales today, no buys. I was expecting that the recent acquisition would probable cause a slight delay but have to admit that now even I've become disappointed.

Time to remove the rose-tinted glasses?

[smithie6] 16/7/2018 06:19

interesting

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looking at fundamentals
I view the acquisition as very positive for the share price
hopefully making ppl reluctant to sell their shares since the EPS is expected to increase due to the acquired PBT

& also the addition to the product & client set should also help the EPS over time

[bamboo2] 15/7/2018 10:23

Potential turn 13-16/7/2018. Bought a few late last week.
Recent price action makes the chart look much more positive, with target price around the recent high, confirmed with an eod close above 86

[smithie6] 11/7/2018 11:42

😨😨

[ansc] 11/7/2018 07:24

Thanks for the link, rathkum, as a long-term investor (21 Feb 2000 - 10k @ 26p) there weren't many facts/figures which I wasn't already aware of but still an extremely interesting article. I remember vividly the days of gloom and doom back in 2011 when all and sundry were condemning Eleco (as it was called then) to the knackers yard but what a buying opportunity that turned out to be. A once in a lifetime experience for me no doubt.

As to the future, I'm still wearing my rose-tinted glasses in respect of Elecosoft and have visions of 100p appearing on the horizon in a couple of years maybe. But I don't envisage buying 100k lots anymore!

[rathkum] 10/7/2018 20:28

Leadership lesson
How this company pivoted from concrete to software

[ansc] 10/7/2018 17:10

A trading update was issued by the company last year on 17th July. Hopefully one will be forthcoming this year and should give us an indication as to what their expectations are for the 2018 financial year. Not forgetting, of course, that the recent Shire Systems acquisition is forecast to be earnings enhancing for the second half.