BVS - Bravura Solutions

[steve fleming]

Fast growing global IT success story, providing services and applications for portfolio management, life insurance and pension industries.

I picked up some of these @ $1.30 in the recent selloff after watching it fall from $3.10 to $1.17 over the last year

A well received financial report for FY07 with revenues of $100m and NPAT of $5.3m (After R&D of $10m)

Consensus FY08 is for revenues of $161m and NPAT of $13m jumping up to $20m in FY09. This excludes any earnings related to future acquisitions.

Revenue increasing both organically and by acquisitions. Have started to leverage their products into the lucrative and fast developing Asian markets. Management also believe they have a unique oportunity to further their recent European successes.

EBITDA margins for FY08 were a healthy 16.6%(adjusted for integration costs) and forecast to be approx 17% in FY08 increasing as scale efficiencies and integration synergies flow through.

Revenues underpinned by recurring maintenance revenue, including $30m a year from Bank of New York.

Management are the major shareholders and have basically delivered on most of their key IPO projections.

CSFB came out on Monday with a $2.80 target, and Huntleys have had BVA as a buy at under $1.90 for most of this year.

[steve fleming]

Delivery The Key For Bravura Solutions
FN ARENA NEWS - 17/05/2007


Changes to superannuation laws have made the sector and those companies providing funds management services much more attractive to investors. Another way to gain exposure is via companies providing essential software and programs for the managers to use.
An example is Bravura Solutions (BVA), a provider of consulting service and wealth management applications to the investment management sector, which includes superannuation providers, fund managers and life insurance companies.

Listing in the middle of last year the company is slowly gaining increased attention in the Australian market, particularly following its recent announcements. These include the acquisitions of AB Prodata and Rufus in the European markets and a deal with New York Life that gives the company increased exposure in the Asian marketplace.

Macquarie sees the Rufus acquisition in particular as a source of significant potential upside, as it provides the means for the company to penetrate the wrap product market in the UK, which offers the chance for the group to cross-sell its other products.

This provides some scope for the company to develop in the UK along the lines of its domestic operations, the broker noting management has taken advantage of what is a fragmented market and developed a full range of products, so providing it with more selling opportunities.

The growth potential in Asia is also significant, as UBS sees the deal with New York Life as not only supporting earnings expectations both this year and next but offering additional upside from the development of its Sonata Risk Module application.

By entering the Asian market through the deal the company will be exposed to a number of potential new customers, while the broker sees opportunities to boost earnings by means of scoping studies and other such work.

It estimates such studies could generate as much as $500,000 per country, so having moved into five countries initially a solid boost is possible. Credit Suisse notes the New York Life arrangement is likely to be extended into more countries in the region, which would add to the upside potential.

The broker rates the stock as Outperform while suggesting the key issue for the company is not the growth potential but delivering on this potential, as it has experienced a period of significant growth in a short-term and there remains the chance of some integration issues.

There has been some evidence of this with delays to the Sonata rollout and some integration costs stemming from the UK acquisition, but in the broker's view it remains too early for a definitive view on how well management are handling the issues. Assuming a worst-case scenario the broker values the stock at $2.08 while its best-case outcome is in excess of $5.00, so there appears solid upside potential if management can get things right.

Macquarie is similarly cautious given the integration risks in the short-term, but points out the revenue gains over a two to three year period should be significant. While the upside potential sounds good, UBS notes with the stock trading at around 28x FY08 earnings the upside potential appears largely priced in at current levels.

The broker rates the stock as Neutral, as does Macquarie, while Credit Suisse sees it as a Buy. The only other rating in the FNArena database is a Hold from Aspect Huntley. The average price target according to the database is $2.42, while broker earnings estimates are largely in line with prospectus guidance for the current year.

Shares in Bravura are unchanged today at $2.13, having traded in a range of $1.19-$3.10 over the past year but having come off its highs following a recent rights issue.

[stephen]

How would you characterise their revenue sources?

What I'm thinking is this:

- revenue from licensing software can be annual or one-off, depending on the model, but in any event it can scale far faster than overheads.

That's some pretty stunning forecast growth I must say.
- revenue from services pretty much only scales with employee numbers, and in fact there's a real risk that as you grow you dilute your ability to enforce your methods, as new hires outnumber the old-timers.

[Hommel]

Fisher Funds has a stake in this one. At the recent roadshow they were very enthusiastic about Bravura.

[macduffy]

SteveF:
Where do you get a sp of $2-13?
BVA closed yesterday at $1-70, its highest price since the low around $1-20.


Disc: small BVA holding.

[macduffy]

Sorry, Steve F
Didn't realise that the last sentence was part of the 3 and a half month old article!

[Footsie]

technically the stock is not in an uptrend yet,,,.........

there needs to be another retracement and a 50% rally from the mid august lows suggests one is imminent.

The correct time to buy is when it starts to rebound from the next pull back.

If you buy in this 1.70-1.80 mark u will be disappointed in the ST.

There is still a large seller out there

[steve fleming]

technically the stock is not in an uptrend yet,,,.........

there needs to be another retracement and a 50% rally from the mid august lows suggests one is imminent.

The correct time to buy is when it starts to rebound from the next pull back.

If you buy in this 1.70-1.80 mark u will be disappointed in the ST.

There is still a large seller out there

Footsie - per your post on HC on the BVA thread on 9 August 2007:

"been watching for over 2 months

bought in today.."

It closed at $1.60 that day.

How does that reconcile to your above post???

Also - Fisher Funds have bought an additional 9% of BVA since April - so there is also a large buyer out there as well.

[Footsie]

Steve / mosteph

anyone who predicted the August crunch deserves a medal
and better still anyone who bought in at 1.20 should be working for me!

I bought a position of 7,000 shares on that day at 1.55 for one of my clients
The position im looking for in BVA is about 100,000

i have not filled what i want yet

like i said - its not in an uptrend yet

yes fisher are buying, but someon large has been selling to them..... and they havent finished

PS was i or was i not correct that buying at 1.70+ was a bad idea...... its now back in the 1.50's

[Footsie]

mosteph

it takes a while for the SSH notice to filter through

i'm not sure of the time scale but they are often weeks or months after the event.

a large player is definitely selling down
queensland investment have been selling out - and the recently filed a ceasing to be sub notice
its probably them

So let me get this right - you bought on the low and sold on the high.
congratulations!