....25 Oct 2012 12:35
WESTHOUSE SECURITIES
@UK*
Strong Buy
ATUK.L / 9.63p / 7.65m / TP: 25p
Interim results
In our view, @UK's interim results read very positively despite group revenues in the first half falling by 13% to £1.1m and the adjusted LBT increasing to £0.36m from £0.22m. Within sales the core ecommerce revenues increased by 13.5% to £0.56m (this equated to organic growth of 77% if the GeM revenues are excluded). As has been flagged previously by management 2012 is very much a year of investment,(in sales and overseas expansion) so it is most encouraging to see that @UK is on track to deliver FY2012E results in line with expectations (£0.4m adjusted PBT on revenue of £3.2m).
The increase in sales personnel has led to a substantial increase in the volume of proposals from 67 (worth c.£1m) in March to 140 (worth c.£2.4m) in May to 180 (worth c.£3.5m) at the end of June. While it is still early days in determining how quickly proposals are converting into purchase orders there is no doubt a significant sales pipeline has already been built in the UK. Indeed, with @UK on a number of framework agreements spanning the public sector, and with companies in the private sector also becoming more aware of the need to quantify their carbon footprint, @UK is currently uniquely positioned to grow the number of its UK ecommerce marketplaces.
In addition, the agreement with Visa International has led to two significant overseas opportunities, one in Asia Pacific and one in the US. While the groundwork (in terms of spend analysis) has been completed in both cases it remains difficult to know if/when they will convert into sales and so are not currently included in our forecasts. Further international development has taken place with the opening of an Indian office, which is already profitable and augurs well, both for further growth in India and the potential to open offices in other countries.
Part of the reason for management's confidence in meeting FY2012 expectations is the significant amount of renewals in the second half following the strong growth in the corresponding period last year. Ahead of publishing a research report in due course we are more than happy to reiterate our DCF-derived 25p target price and Strong Buy recommendation.
And this note was before the asia conference. Hmmmm. Reads very well, but then again so do all broker notes