Why is the Fusionex CEO so excited?

Big data analytics, artificial intelligence (AI) or the Internet of Things (IoT) are just some of the technologies that are transforming our daily lives. And yet, for investors, there appear to be precious few ways to ride the next wave of the 4th industrial revolution.

According to the International Data Corporation, big data and data analytics spend is expected to reach $151 billion (£124 million) in 2017, presenting a significant revenue opportunity for companies with the right technology.

Fusionex International, a Malaysian software firm specialising in all three technologies has attracted the attention of investors. Its shares crashed last year on concerns about poor cash collection, and they've fluctuated in recent months.

However, the AIM-listed company did give a hint of its potential Wednesday when it posted results for the year to September. Crucially, cash collection days fell to 78 from over 100.

Fusionex has been encouraged by the take up of its big data analytics platform GIANT, which recorded a three-fold increase in customer numbers to 115 in the year. By the end of January it was 163.

The platform gives customers the power to extract data from sources throughout their organisation before turning this into information that can be used to increase efficiency or achieve a competitive advantage.

GIANT is proving particularly popular in the retail and travel and hospitality sectors, as well as financial services. This year, Fusionex is planning to launch a next-generation version of GIANT, which will feature enhanced visualisation features, stronger search driven analytics and more intuitive user features.

The company racked up revenues of 94.6 million Malaysian ringgit (£17.4 million), a rise of 23%, despite switching to a subscription model from a licence-based one. Major client wins have included the Malaysian Stock Exchange, as well as business with an Asian resort and a global media conglomerate.

The group still turned in a net profit for the year of RM1.4 million (£260,000) despite a significant increase in investment in the business.

Chief executive Ivan Teh  is typically bullish: "With the impressive momentum continuing in the first four months of the year, a solid pipeline of new customers and the launch of our market-leading GIANT 2017 product on the horizon, the company is excited and confident in its ability to realise its significant growth opportunity."

Peel Hunt analyst Damindu Jayaweera said the switch to a subscription-based model made it more likely that Fusionex's new business wins will remain on board, thus enhancing the company's revenue visibility.

On yesterday's close of 154p, Fusionex trades on a price/earnings (PE) ratio of 25 for calendar-year 2018 and, given its 60% recurring revenue profile, Peel Hunt has reiterated its 'buy' rating with a price target of 220p.

Jayaweera added: "Whilst the company has delivered ahead of expectations, our forecasts remain unchanged for now.

"We reiterate our 'buy' stance, noting that this stock is one of the few pure plays on some of the fastest structural growth themes in technology; Big Data, AI and IoT."

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.