AnalystChris Savage 612 8224 2835AuthorisationTS Lim 612 8224...

AnalystChris Savage 612 8224 2835AuthorisationTS Lim 612 8224 2810GICS SectorSoftware and ServicesExpected ReturnCapital growth 43.8%Dividend yield 0.0%Total expected return 43.8%Company Data & RatiosEnterprise value $50.1mMarket cap $59.2mIssued capital 369.8mFree float 86%Avg. daily val. (52wk) $93,56512 month price range $0.037 - $0.19Price PerformanceBELL POTTER SECURITIES Page 1(1m) (3m) (12m)Price (A$) 0.10 0.07 0.05Absolute (%) 60.00 135.29 196.30Rel market (%) 60.54 125.75 189.20SpeculativeSee key risks on page 4Speculative securitiesmay not be suitablefor Retail clientsLeading provider of environmental management softwareEnvirosuite is a leading global provider of environmental management software. Thecore product of the company – Envirosuite – is a cloud based platform that providesenvironmental monitoring, management and investigative capabilities to a wide rangeof sectors including wastewater, mining, agriculture and ports and as well asgovernment for regulatory purposes. The company now has over 90 subscriptions onthe Envirosuite platform and over $5m in annualised recurring revenue (ARR).Large global market but …The size of the total addressable market (or TAM) for Envirosuite is estimated to bebetween US$3-4 billion p.a. globally and note this only includes the target verticals ofthe company. The size of the key target vertical – wastewater – is estimated to beUS$800m p.a. globally and Envirosuite is currently expanding its technical solution toaccess a US$2bn market opportunity.… a lack of direct competitorsThere are many suppliers of environmental management software globally thoughthere are few if any providers who cover all of the same sectors as Envirosuite orwhose software has the same functionality. The greater functionality means theEnvirosuite software tends to be more expensive than that of its competitors but alsomeans the company often wins the tender when the requirements are complex.Investment view: Initiate with BUY (Spec.) recommendationWe initiate coverage of Envirosuite with a BUY (Speculative) rating and a valuation of$0.23. The valuation is generated from a blend of two valuation methodologies weapply to the company: EV/Revenue and DCF. The valuation is a 44% premium to thecurrent share price and the total expected return is the same given there is no forecastdividend yield. The Speculative rating is due to the forecast losses of the company forthe next two years (FY19 and FY20).Absolute Price Earnings ForecastYear end 30 June 2018 2019e 2020e 2021eTotal revenue (A$m) 3.8 8.3 11.8 17.0EBITDA (A$m) -5.5 -3.1 -1.4 1.7NPAT from cont. ops. (A$m) -5.8 -4.4 -2.8 0.0EPS (diluted) (cps) -2.5 -1.2 -0.7 0.0