Avior Capital Markets - Datatec Ltd. (10BN) DataTec | Stars aligning

Report

Avior Capital Markets

Ruhan Du Plessis

DataTec | Stars aligning

We expect Datatec's earnings growth to accelerate to 118% CAGR over the next two years. The rollout of 5G and cloud technologies has created new demand and traction for the industry. The rollout of networks will drive Datatec's growth due to its over exposure to the industry (>50%). In addition, Datatec convincingly reduced its fixed central cost base in FY'19 to deliver operating leverage. The Group believes its current portfolio is well positioned and does not need to be augmented with transformative acquisitions. The share buyback programme will further compound the intrinsic growth drivers of underlying HEPS.

24/05/2019 10 EN

Underlying

Datatec Ltd.

Datatec is an international information and communications technology (ICT) business with operations in over 60 countries across North America, Latin America, Europe, Africa, Middle East and Asia-Pacific. Co.'s segmental include: Westcon, which is engaged in the distribution of networking, security, and unified communications products and data center solutions; Logicalis, which is engaged in ICT infrastructure solutions and services; Consulting Services, which is engaged in strategic and technical consulting; Corporate, which is comprised of head office companies including Datatec Financial Services, a new capital/leasing business under development and consolidation adjustments.

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ZAE000017745 Johannesburg Stock Exchange South Africa

Provider

Avior Capital Markets

Avior is a globally recognised capital markets research and trading firm, with the broadest research coverage within the region, with 100+ SA and 20+ SSA companies under coverage. Avior services clients from offices in London, Cape Town and Johannesburg.

Our research quality is consistently recognised in local and global surveys, with 18 analysts currently rated in their respective sectors (FM 2017). Value add through in-depth, innovative, high quality and consistent research with comprehensive underlying fundamental modelling supported by regular analyst and roadshow interactions.

Avior has proven that by working closely with our clients we can mutually develop dominant positions in certain sectors, going from strength to strength. Avior has a dedicated ESG team, having been ranked #1 in Corporate Governance research since 2008.

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Analysts

Ruhan Du Plessis

Other Reports on these Companies

Edison Investment Research

Datatec - Operational focus drives H125 profit growth

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Datatec’s H125 results confirmed improved profitability in each division, resulting in a 56% y-o-y increase in underlying EPS to 11.4c. Group revenue declined 5.5% y-o-y, mainly reflecting a shift towards net revenue- reported software, but gross profit increased 3.5% due to a better product mix. Combined with good cost control, adjusted EBITDA increased by 18.5% y-o-y, resulting in a 0.9pp increase in the adjusted EBITDA margin to 4.1%. The group closed H125 with net debt of $108m, down from $123m at the end of FY24. Despite softer European markets, the company expects all divisions to report...

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DataTec | Stars aligning

Datatec - Operational focus drives H125 profit growth

Datatec - Better profitability across the board

Datatec - Encouraging H1 across all divisions

Tiger Brands | ESG | Pressed to execute

SA Investment Strategy | Review of January 2020 for SA investors: Coronavirus weighs on the ZAR

SA Banks | Low credit risk in commercial property | Time to buy SA banks

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