Escher Grp Share Discussion Threads

[knackers] 11/6/2014 08:16

Hmmm well our 'Wexboy' doesn't have much of a track record of calling this one right does he, AISHAH?

He's right about this being closely held with next to no free float but my sense is that those who are invested here are more than likely to be [pretty] close to the company and have a clearer idea of the potential and opportunity than others.

I understand Escher's sales pipeline is stronger than ever, and that is for just traditional Riposte postal contract opportunities. Add to that the significant investment that has made over the past 3 years in developing an all new mobile and retail capability, which is a modular add-on to the Riposte platform and you can begin to see the scale of the market opportunity that is unfolding right now. FWIW I believe on a whole number of levels that ESCH are a prime acquisition candidate in the next 8-14 months, hence the high valuation and PG target price.

Both Goodbody Stockbrokers and Panmure Gordon reiterated buy ratings on the stock on Monday...

[aishah] 10/6/2014 21:23

I'm slightly amazed to see ESCH shareholders still keeping the faith – in fact, they've pushed the share price higher (though it's backed off from a March high of 395p). But with 42% of Escher owned by management, and another 40% in the hands of its three main institutional investors, the share price isn't necessarily that representative of underlying intrinsic value anyway. The company's 2013 performance definitely struck a bum note vs. the high growth/high margin story shareholders bought into so enthusiastically. Revenues only increased 8% to USD 24.7 million, putting ESCH on a 4.2 Price/Sales multiple!

That looks pretty rich when its operating free cash flow margin's averaged just 6.8% in the past two years, while free cash flow was negligible. Even more so, when you ponder its revenue composition: A whopping 50% of Escher's revenue comes from its top 2 customers, plus software development & consulting's actually been the key revenue growth driver in the past 2 years (and is now almost 50% of total revenue). Now, we can obviously expect a migration from consulting revenue to recurring contract revenue, but how much & when are crucial questions. One way or the other, the transition will likely present another revenue growth challenge. [However, I'm encouraged by promising signs of diversification into e-government, and mobile loyalty, reward & payment - though I suspect these are small revenue streams for the moment. Revenue of USD 6 M deferred into H1-2014 is encouraging too - but doesn't necessarily guarantee a blockbuster year].

Historically, Escher has managed to clock up 30%+ operating margins – which intuitively makes sense for this kind of business – unfortunately, those margins are likely to remain out of reach in the near/medium-term. Right now, for valuation purposes, let's bridge the gap by assuming ESCH can re-attain half those margins – and I mean on a cash flow basis – which deserves a 1.5 Price/Sales multiple. With cash & debt broadly similar, and free cash flow roughly neutral, we can ignore any potential cash/debt adjustments:

USD 24.7 M Revenue * 1.5 P/S / 1.6719 GBP/USD / 18.7 M shares = GBP 119p

Escher remains substantially over-valued. While a share price of 330p might reflect the future outlook for ESCH, it certainly doesn't appear to adequately reflect the gap (& the risks) between today's financials & that potential future... Time will tell – investors may simply prefer to keep focusing on a diet of fresh contracts/news flow, rather than profits.

Price Target: GBP 119p

Upside/(Downside): (64)%

[knackers] 10/6/2014 12:05

Good timing ;o)

[knackers] 10/6/2014 08:41

Solid prospects here for the foreseeable, underpinned by a strong pipeline of traditional post and new Interactive Service project opportunities...

[knackers] 09/6/2014 09:28

Minimal, if any impact, Ed. Frustratingly the s/w solution/platform was delivered some time ago (~6 months ago), all about the roll-out timeframe and that is down to USPS. But it sounds like Escher are very much involved in the roll-out - more services revenue(?)

[edwardt] 09/6/2014 09:04

knackers - suppose this was the risk that the roll out is subject to delays. don't think it damages the longer term outlook though?

[aishah] 09/6/2014 08:49

Escher Group Holdings plc

Escher update on customer rollout

Escher Group Holdings plc, (AIM: ESCH, "Escher" or "the Group"), a world-leading provider of outsourced, point of sale software to the postal industry, updates its guidance on when it will fully recognise license revenue from a customer. Escher will recognise $1.8m of the outstanding $6m licensing revenue in the first half of 2014, with the remainder now expected in the second half of 2014. For the year as a whole, the Group continues to trade in line with Board's expectations.

The customer is currently rolling out Escher's software to its Post Office network but more slowly than originally anticipated. However, the Board remains confident that the customer will have deployed the software to a sufficient number of workstations to trigger the full license payment in the second half of 2014.

Liam Church, Escher's CEO said:

"Our software is currently live in a number of the customer's post offices and the rollout is expanding on a weekly basis. We continue to support the customer in a large and complex software deployment exercise."

[sharesoc] 05/6/2014 14:48

Shareholders and potential investors in Escher Group will probably be interested in attending ShareSoc's growth company seminar on the 25th June where ESCH will be presenting.
More at: hxxp://www.sharesoc.org/seminarjune2014.html

[knackers] 04/6/2014 08:13

Sneaky peek at the new SME project Escher are facilitating in the North East with GoOnUk and Digi Leaders NE.

Underpins the versatility of their messaging platform with potential way beyond Posts.

[knackers] 08/5/2014 10:31

Escher Enterprise Mobility Solution

Really shifting through the gears now. They may well have white labelled a 3rd party tech and integrated into their Interactive Services (IS) division. Gather this is something they've been working on for sometime and obviously important for IS and loyalty/mobile solutions generally to work across devices.

[knackers] 07/5/2014 11:57

Could be quite a lengthy process, Ed - not sure. If USPS is anything to go by I doubt it'll be material in this FY but will have 'long legs' i.e. 3 year project and some. Bread and butter for Escher and with POs being increasingly viewed as front office for Govts, Escher are well aligned/positioned.

[edwardt] 07/5/2014 09:09

knackers - any views on how long we will have to wait to find out about the post office tender? applications closed on 24th March....

[knackers] 02/5/2014 09:57

Escher won the Loyalty Solutions 'trophy' at last night's Contactless & Mobile Awards event in London sponsored by VISA.



Congrats and kudos to the Interactive Services Team!

Donal McGuinness, Escher Interactive Services, Managing Director:

"This win is a fantastic achievement for Escher and is in recognition of the strong level of investment we have made in developing a market leading loyalty solution. Our loyalty solution has been implemented across a large number of retail outlets by utilizing a number of NFC (Near Field Communications) and other technologies such as Host Card Emulation, peer-to-peer (P2P) and QR codes. The feedback from our customers has been very positive and our client base continues to grow with a very strong pipeline of new business secured for the future".


Very nice....

[knackers] 23/4/2014 18:10

AnPost seems to be on a mission and are very much on message from an Escher perspective, "..post offices as front office for key Govt services" interesting and obvious significance for Escher which is uniquely placed to enable these new services. Clear connection to standard banking services as well.

[knackers] 22/4/2014 15:10

Nope ;o) no more Blinkx for the moment, but I continue to hold having bought back in and around the £1 mark. (sold out in Jan). Close call ;o)

A lot of misinformation and below-the-belt shenanigans going on there (bit like QPP...). There'll always be charlatans seeking to take average of media tech Cos ad platforms, but in no way is Blinkx encouraging such activity, further ad ware only a small part of their business which I'm sure will be clarified with results next month...amongst other things.

[edwardt] 22/4/2014 14:34

i hope those profits went on the holiday rather than more blinkx!

[knackers] 22/4/2014 10:14

More 'interesting' trading this morning. Do I sniff-a-niff?

Hmmm, I just wonder...

[knackers] 22/4/2014 09:44

Apols for the silence Ed - been away on hols.

Nope, not me - more than sufficient to be getting on with ;o) I actually sold down about a qtr of my holding at a healthy gain last month which the market absorbed with ease (most unusual for such an illiquid stock). Clear someone fancies these for a bit more and I sense 'stuff' going on behind the scenes - more than we realise. Hence continuing to retain a significant core holding but am not chasing this one - not just yet.

[edwardt] 16/4/2014 08:46

some nice volume, i assume that is not you topping up knackers? or maybe the fd read my comment!

[edwardt] 15/4/2014 12:54

interesting reading - obviously husband and wife own a lot and good ownership by most of executive team. only thing that i thought odd was the fd has no stake? knackers any views?

[knackers] 08/4/2014 16:03

We'll see you back here before long 'battle'. Am certain we'll be hearing more about TrEx and progress at the Interactive Division before the summer's out. Don't stay away too long... ;o)

[edwardt] 04/4/2014 09:44

where's the fun in that battle bus?

[battlebus2] 03/4/2014 21:35

I've decided to take a back seat with my share dealing and wish all holders here the best, it's been a good run over the last year or so.
Knackers keep up your great posts.

[edwardt] 01/4/2014 15:35

jsut checked - time limit for submission of tender is 24th March = hopefully they have their hat in the ring...

[knackers] 01/4/2014 15:23

The tender should be open, so imminently Ed - if not already. The tender process on the other hand is likely to be lengthy. Something else must be driving this activity - and something rather significant given the premium price point. Hmmmm