One of most compelling stocks on AIM

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.