finnCap Research Company Notes - 5 July 2018

Jul 05, 2018 / Research Notes

Daily corporate finance updates from finnCap Research

Sector: Support Services

Utilitywise (UTW): £10m free cash flow targeted in FY21

Key data                              

  • Share price (p): 30.5
  • Target price (p): U/R
  • Market cap (£m): 23.6
  • Enterprise value (£m): 38.6

Utilitywise has released a strategy update that includes two new financial targets. A net cash position is targeted by July 2021 and underlying free cash flow of at least £10m in FY 2021. On the current share price and market cap, this would equate to a very attractive free cash flow yield of 42%.

Guy Hewett | ghewett@finncap.com

Sector: Technology and Telecoms

Elecosoft (ELCO): Acquisition adds Facilities Management solutions

Key data                              

  • Share price (p): 75.5
  • Target price (p): 88.0
  • Market cap (£m): 58.5
  • Enterprise value (£m): 56.1

Elecosoft’s acquisition of Shire Systems, a leading UK CMMS (Computerized Maintenance Management Systems) provider, expands the portfolio further down the lifecycle of buildings; from its strong established position in design project management and construction, into the ongoing Facilities Management industry. This is a very natural progression; Elecosoft solutions already capture huge volumes of dynamic building data in the early design and development phases, effectively creating a handbook for buildings. It is logical to port that data into a FM solution to preserve the knowledge for the enterprises managing those structures during their future years of use. The price is reasonable (7.2x earnings) and funded by relatively cheap debt, so the deal is earnings enhancing. We raise our FY 2019 earnings forecasts by 10% and our target price to 88p.

SRT Marine Systems (SRT): Ecuador contract win underpins forecasts

Key data

  • Share price (p): 30.8
  • Target price (p): 75.0
  • Market cap (£m): 39.3
  • Enterprise value (£m): 37.3

The global provider of maritime management and surveillance systems and the leader in AIS transceiver technology and solutions, has won a contract to supply an IUUF (Illegal, Unreported, Unlicensed, Fishing) detection system to Ecuador. The contract was anticipated in market guidance so helps to underpin our current expectations; however, this is an excellent endorsement of the company and its technology and should lead to further project success in the region and around the world. SRT does seem to be picking up momentum as this follows an impressive OEM agreement in Japan. We look forward to the results later this month for more detail on progress.

Lorne Daniel | ldaniel@finncap.com