Eleco Public Share Discussion Threads

[smithie6] 13/4/2020 09:36

here is some text from an RNS from 9th April from the Speedy equipment hire co.

which shows that the construction sector has seen a noticeable or big reduction in activity/turnover

"We have temporarily closed a number of our smaller depots, and furloughed c.50% of our colleagues (1,725) in the UK under the government's Coronavirus Job Protection Scheme and in Ireland under the Irish government's Wage Subsidy Scheme. We continue to maintain a national coverage through our larger superstores from which we are able to service customers who are providing essential services at this time. All depots are physically closed to customers, with trading now being undertaken solely through the Group's digital platforms or by telephone."

[mbcontrarian] 13/4/2020 06:18

All the points you mention are macro by nature of the crisis. Its obvious earnings will be hit by the crisis but not many won't be.

It comes down to the agreements ELCO will have in place with its customers (usually annual agreements) and it's ability to mitigate deflction from these agreements (will test relationships). You mention it's a SaaS business but only a fraction of its revenue is sold in this manner, with the majority of the software being sold under a perpectual licencing model (you need to research each of the businesses within the Group more as your understanding is lacking to apply your judgement). This will have an exponential impact on growth of it's recurring base: falling licence income, with increased churn rates of support/maintenance customers.

Based on the FY19 Interims ELCO had c. half a year's recurring maintenance held in deferred revenue - providing fair revenue visibility. Will be interesting to see how this tracks in the FY19 full year results.

ELCO's software business has been through a market crisis before and you can review the AR's spanning 2007 through to 2012 to understand how it was affected historically (as a broad proxy) and how it subsequently recovered.

My point is COVID-19 is not going to be the game changer for this business.

[smithie6] 12/4/2020 23:28

also

the co. stated

"..in present conditions we have been even more vigilant in the control of operational costs and our general overheads "

&

"...do not consider ourselves to be in "normal times" and therefore the Board has decided not to recommend the payment of a final dividend or to declare a second interim dividend, in respect of the year ended 31 December 2019"

Its all there in black & white.

Those that think that income is not reduced by the reduction in activity at customers, ...needs to learn to read imo.

[smithie6] 12/4/2020 23:05

MBContrarian

"Those who already have installed the system will continue to use it, despite the crisis".

that is a major point we disagree on

as I understand the SAAS cost depends on the number of users, & the number of different types of software/functions they want, basic functionality of 1 package would be cheaper per month than full functionality of all packages

and the cost would vary depend on the number of users

many housing construction companies have either closed all of their sites or many of them.
and they (& all companies that have seen a big drop in turnover have slamped the brakes on spending money

cutting the cost for software not being used is fairly obvious thing to cut imo, while perhaps keeping 1 user payment going just to keep it open

----

& the RNS states
"However, feedback from some of our customers and channel partners suggests that we are likely to experience a degree of disruption to our operations going forward due to the impact of the Covid-19 outbreak in the period. "
...ie. the customers are reducing their needs/consumption

The RNSs from construction companies are public, the ones I read from housing constructors said they had closed many or all sites, not secret.

[mbcontrarian] 12/4/2020 16:01

Probably best to avoid any punishment 😅

[brummy_git] 12/4/2020 14:44

FYI ansc - I will in future publish all my ELCO analysis here on Twitter instead

[brummy_git] 11/4/2020 15:33

Goodbye MBcontrarian. I've filtered you, Smithie6 & Chimers

[mbcontrarian] 11/4/2020 15:31

All I’ve said is ELCO are your client. Pointing out a black and white fact.

[brummy_git] 11/4/2020 15:27

No probs MBContrarain

Your lack of transparency, desire to hide behind pseudonyms & posting of constantly negative ELCO comments, is a trait that unfortunately doesn't do justice to your obvious intelligence

Indeed you, Smithie6, Chimers & Michael Burry (email pseudonym) are all peas from the same pod. And may in fact even be the same person. Doesn't really matter though....

Good luck whoever you wish to be - Darth Vader next time might work?

[mbcontrarian] 11/4/2020 15:11

Your becoming increasingly paranoid.

[brummy_git] 11/4/2020 14:52

MBContrarian - Just concidience then that Smithie6 (who has never posted before) suddenly arrives today - & you decide to start defending ELCO, a stock that you've slated constantly B4?

What's your name MBContrarian? And why do you waste so much time doing all this 'smoke & daggers' & vitriolic stuff? For the 5th time of asking....

[mbcontrarian] 11/4/2020 14:43

Whoa Paul - I defended ELCO on that comment!

[brummy_git] 11/4/2020 14:35

Hi Smithie6

Do you have any connection with either MBContrarian and/or Chimers?

All these advfn accounts seem to follow the same pattern of trashing any company you don't like? Kromek, Northbridge In, elecosoft & many others?


Also, why do you do it? What's the beef?

Thanks

[mbcontrarian] 11/4/2020 14:33

I don't think that is a fair assersion to make. This is niche software that does have value to it's user base. Consider PowerProject - likely planners need the software more than ever. Lower licence sales as a consequence of less investment from potential clients, for sure.

Those who already have installed the system will continue to use it, despite the crisis. The discretionery revenue streams: Services / Licences, plus the lumpy visualisation income - will be where the risk lies. The vast majority of businesses will experience the macro effect of the crisis, inevitable.

[smithie6] 11/4/2020 13:49

"However, with a large existing user-base paying recurring support & maintenance,"

surely, clients using this SAAS software can just drastically cut the number of users they pay for or cut their monthly payment completely

there is NO lifetime licence

if they have closed construction sites

as many constructors have

for me I see high risk in holdi g ELCO shares during this crisis

compare with say Tesco, well people stoll need to eat & will keep buying.
With closed construction sites it is a very different story imo.

[brummy_git] 10/4/2020 13:24

It's seems to have all gone quiet again MBContrarian?

Really strange behaviour for someone obviously bright, yet equally so vitriolic towards Elecosoft? Very odd.

[brummy_git] 10/4/2020 13:03

So let's try again MBContrarian (3rd time politely, or is it the 4th?)

What's your real name? Why the deliberate opaqueness?

[ansc] 10/4/2020 12:07

My understanding was that MiFID 2 was particularly applicable to AIM companies and very few large investment firms or professional investors like yourself are interested in such like. ED or any nominated advisor/broker would soon lose their followers if their 'advice' was so awry that their followers/subscribers regularly lost money.

As a passionate investor yourself, why did you initially ask whom Micheal Burry was then?

Seeing as you are steadfastly refusing to answer the question as to your objective in continually denegrating Elecosoft, as a long term investor in them myself, I could argue that any research you may have done on them or opinion expressed is biased as you may profit from a faltering or falling share price.

[mbcontrarian] 10/4/2020 11:43

MiFID II is only relevant in the context of large investment firms who now have to ‘unbundle̵7; services. This resulted in buy side firms hiring more in house capacity to perform proprietary research to support their portfolio managers and has applied pressure on sell side research firms.

This is not relevant in the context of ED as they sell research to companies who wish to promote their stock. This service was prevalent prior to MiFID II. MiFID II only relevant in a professional investing context. Hence why the ED material is classified as marketing material. Any other questions?

The only other source of research is finnCap, who also profit from its contract with ELCO as its nominated advisor / broker.

Ref Michael Burry, surely everyone who has a passion for investing knows who He is..?

[ansc] 10/4/2020 11:19

A moment or two ago you didn't know whom Micheal Burry was!

[ansc] 10/4/2020 11:17

Are you familiar with MiFID 2 from the EU? As I understand this, ALL company research has to be paid for now and is not allowed to be misleading whether they publish such research information or investors search it out for themselves. Perhaps you would advise where I've clearly misunderstood these guide lines.

[brummy_git] 10/4/2020 11:16

Great, so what's your real name then? You asked me & I politely replied it was Paul Hill. What's the problem? quid pro quo?

[mbcontrarian] 10/4/2020 11:10

Paul, I’m not sure what the obsession is with Michael Burry (the guy from the big short?).

[brummy_git] 10/4/2020 11:09

Thanks MBContrarian

What is you're real name then, so we can all be civil to each other?

[mbcontrarian] 10/4/2020 11:09

*retail/private