6th Feb 2025. 9.01am
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Eleco beats expectations with strong 2024 growth
Eleco (ELCO) recently released a solid trading update, delivering strong revenue growth and exceeding market expectations for 2024.
Despite a challenging macroeconomic backdrop, the specialist software provider for the built environment increased total revenue by 16% to £32.4m, with organic growth of 9%. Recurring revenue was a standout, climbing 20% to £24.9m, now making up 77% of total revenue—a clear sign of the company’s successful transition towards a more predictable, high-margin business model.
Cash generation remained robust, with year-end cash rising to £14.0m, even after acquisition-related outflows and higher dividend payments. With no debt on the balance sheet, Eleco is in a strong financial position to continue investing in growth. The acquisitions of Vertical Digital and, more recently, PEMAC, have bolstered the company’s capabilities, expanding both its technical expertise and market reach.
Management remains confident in the company’s trajectory, highlighting Eleco’s ability to scale while maintaining profitability. With momentum firmly in its favour and further opportunities ahead, Eleco looks well-positioned to build on this success in 2025.
ELCO Daily Candle Chart
Multiple on Invested Capital faces setback
Litigation Capital Management (LIT) has had a tough start to the year, with shares falling in response to a first-half loss driven by a mix of case wins and losses.
While the company achieved four successful realisations, including a high-profile arbitration win against Poland, three case losses—most notably the Queensland Electricity trial—led to a write-down and an A$8m loss after tax.
The fair value of ongoing cases saw a modest positive adjustment, but a slower pace of new commitments, down to A$25m from A$90m a year ago, has raised concerns. However, LCM remains well-capitalised for future growth, securing a US$75m credit facility to support ongoing and upcoming cases.
Despite short-term setbacks, the company’s Multiple on Invested Capital (MOIC) of 3.7x demonstrates the underlying strength of its portfolio. Given LCM’s disciplined approach to case selection and capital deployment, we are going to continue to hold the stock.
LIT Daily Candle Chart
Netcall’s momentum builds on cloud growth
Netcall (NET) surged higher last week after delivering an upbeat trading update, with revenue climbing 22% to £23.0m and adjusted EBITDA rising 18% to £5.7m.
The company’s Liberty Cloud platform continues to drive impressive growth, with Cloud Annual Contract Value jumping 47% as more businesses integrate automation and AI into their customer engagement strategies. The strong uptake of Converse CX, Netcall’s cloud contact centre solution, highlights the increasing demand for AI-powered efficiency, with two-thirds of customers also adopting AI products.
The company is also seeing early success from its recent acquisitions, with its first cross-sale of the Liberty platform into GovTech’s customer base and strong initial traction for Parble’s Intelligent Document Processing solution. This ability to leverage acquisitions for cross-selling opportunities is helping Netcall expand its market reach while maintaining strong organic growth of 12%. With a healthy cash balance of £22.0m and no debt, the company has ample firepower to continue investing in product development and strategic acquisitions.
Looking ahead, Netcall’s position remains strong, underpinned by a growing base of recurring revenue and a solid pipeline of new opportunities. The continued evolution of its cloud and AI capabilities keeps it well-aligned with the digital transformation needs of its customers. With momentum building and management confident in the second half, the company remains well-placed for further growth.
NET Daily Candle Chart
Synectics secures $2.2m contract for major casino upgrade
Synectics (SNX) has secured a new $2.2 million contract to upgrade and expand the security systems of a leading gaming resort in South-East Asia.
The deal builds on the company’s long-standing relationship with the customer, enhancing its existing Synergy software and hardware infrastructure to meet evolving security demands. Given the resort’s high-profile status, the upgrade will be carefully managed to ensure seamless 24/7 operations throughout the process.
This latest contract follows a strong 2024 for Synectics, where it secured $13.2 million in deals with the same customer. The project involves a full suite of professional services, including project management and on-site commissioning, reinforcing Synectics’ position as a trusted partner in the region. The company’s expertise in handling complex, mission-critical security upgrades makes it a natural choice for high-stakes environments like major gaming resorts.
With the upgrade set to be delivered primarily within the current financial year, Synectics continues to demonstrate its ability to win and execute significant contracts in a specialised market. CEO Amanda Larnder highlighted the importance of this deal, emphasising the customer’s confidence in Synectics’ expertise. The company remains well-positioned for further growth as it strengthens its presence in high-security sectors.
SNX Daily Candle Chart
Inspecs eyes growth after solid second half
Inspecs (SPEC) ended 2024 with revenue of £200.5m, slightly below the prior year, but the second half showed a strong 5.9% rebound.
The group’s gross profit margin improved to 51.4%, and underlying EBITDA remained stable at £17.5m. While full-year figures were behind initial expectations, the company highlighted progress in key areas, including the full integration of its US businesses and a newly operational manufacturing facility in Vietnam, which is already attracting promising enquiries.
The company also made strides in strengthening its financial position, reducing net debt to £22.9m and securing a refinancing deal with HSBC that extends banking facilities to 2027. This move is expected to cut interest costs by £0.6m in 2025, supporting Inspecs’ strategy to improve margins and profitability. Eschenbach Optics performed well, particularly in the US and Europe, and the European business gained market share despite challenging conditions.
Looking ahead, Inspecs is focused on expanding revenue, increasing EBITDA margins, and continuing to reduce debt. CEO Richard Peck acknowledged that 2024 fell short of initial targets but emphasised the company’s operational efficiency gains and strategic investments. With a solid start to 2025 and an expanded production footprint, Inspecs appears well-placed to drive profitable growth in the year ahead.
SPEC Daily Candle Chart
Yü Group’s strong growth fails to excite market
Yü Group’s (YU) latest trading update failed to inspire the market, despite delivering another year of rapid revenue growth and record cash generation. Shares struggled to react positively, as investors appeared to focus more on the moderation of new bookings rather than the headline figures.
While the company posted a 40% increase in revenue and exceeded EBITDA margin expectations, the decline in average monthly bookings to £42.6m from £55.5m the previous year signaled a potential slowdown in future momentum. With energy prices normalising, the sharp revenue growth seen in previous years may be harder to sustain.
Investor sentiment may also have been tempered by the shift in growth dynamics. While Yü Smart continues to expand rapidly, with a 169% increase in installations and an annuity income stream growing to £1.3m, its contribution to overall revenue remains relatively small. The energy supply division, which accounts for the bulk of Yü’s business, showed strong meter point growth but now faces a more competitive environment with less tailwind from extreme energy price volatility. As a result, some investors may be questioning how much of the recent success was driven by market conditions rather than structural improvements in Yü’s business model.
Despite these concerns, the company remains well-positioned financially, with a net cash balance of £80.2m and a confident outlook for 2025. Contracted revenue for the next financial year has already risen to £566m, a 9% increase from 2024, suggesting continued growth even as pricing conditions stabilise. However, with expectations already high following years of rapid expansion, the market may be looking for stronger evidence of sustainable margin expansion and long-term earnings visibility before rewarding Yü Group with a higher valuation.
YU. Daily Candle Chart
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