Datatec - Operational gearing drives EPS growth
H122 underlying earnings per share (uEPS) is expected to be between 8.0 and 8.5 US cents, more than double the H121 comparator at the onset of the COVID-19 pandemic (H121: 3.9 US cents) and c 50% of our FY22 uEPS estimates (16.5 US cents). Under JSE rules, management is required to put out a further trading update (following the 15 September trading update), since H122 EPS estimates are expected to be more than 20% above the H121 comparator. As we flagged in our 15 September note, Datatec’s operational gearing magnified the top-line performance (H122 revenues rose 15% y-o-y to c US$2.26bn) at the earnings level. Assuming momentum is carried into H222, and considering Datatec’s historical seasonal weighting to the second half of the year, the group remains on track to meet and potentially exceed our FY22 earnings estimates.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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