I just got an additional recommendation for Basware, which has fallen sharply, this morning.
I thought I’d open a thread.
I bought a batch of Basware at around 18 euros, as I thought a lot of bad news had already been priced into the stock. However, management has been replaced, and profitability was intended to turn positive in 2020. I assume this could lead to a stronger share price.
My position is not very large.
What do you think, how many have already given up and forgotten the whole company?
Yeah! I thought the same way, that since Arrowglass was in the process of selling, some other owner might be better than them, and here would be a ready-made treasure, when my own average acquisition cost is below 18 euros, so some small 50% premium, for example, would already feel reasonable, but of course, something like 35-40 euros would be better.
Last time the price would have been 48 euros/share, but apparently, the buyer’s financing channels were not in order.
How is Basware’s financial performance so poor, Viljo? I encounter Basware’s services all the time at work and never thought the industry would be this difficult? What’s going wrong here?
It must be the cloud transformation where the money comes in later. And the fact that a lot of energy has gone into migrating old customers to the cloud. Last time, the CEO said that the quality of customers was better, i.e., more new customers, I recall.
My biggest reason for buying was the low price. 17.56 and solid 18 euro lots
If internationally SaaS companies are valued at an EV sales multiple of 8, then for Basware that multiple seems to be around 2.5, whereas it would have been around 5-6 at the beginning of the year with the takeover bid.
Not much support from other things, of course. On the other hand, it seems that the change in the invoicing model is radical for the revenue stream, but will it be corrected?
I, for one, think that when Basware is a leading player in its field, and the seasonality is eliminated by the end of 2020, and presumably can still grow, the company will be viewed differently. According to Petri, the acquired activity in the industry is at a high level, and SaaS companies’ EV/sales valuation is, on average, around 8, while Basware’s is around 2.5?
In the cloud model, money is received retrospectively, and new contracts are apparently spread over several years, followed by monthly billing. Apparently, at this stage, when the transformation is still fresh, we are somewhat in an intermediate situation, waiting for payments to accumulate? Costs have presumably increased massively due to the transfer of old customer accounts to the cloud, and these are expected to decrease.
So I based my purchase speculatively on low valuation, improved profitability, and the cloud order backlog. And on the idea that once enough old customers have been moved to the cloud, there will be an opportunity to focus on acquiring new ones.
I’ll continue the conversation alone. I noticed that at 23 euros, the rise stalled, but it was lightened. However, my idea is to hold until we get just under a 100% premium on the tender offer.
The main owner is dismantling their fund and will surely trade their stake. It can’t be put on the sidelines. It has to be sold as a lump sum, and that stake is probably 25%. Did I remember correctly?
While waiting for that, by the end of 2020, the result should be in the black if the new management is to be believed.
It should be a somewhat profitable company by 2020.
