Edison Investment Research - Datatec Ltd. (10BN) Datatec - Solid H124 performance supports FY24 outlook

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Edison Investment Research

Richard Williamson

Datatec - Solid H124 performance supports FY24 outlook

For H124, Datatec reported 15% y-o-y revenue growth, gross margin expansion, EBITDA growth of 39% and adjusted EBITDA growth of 2%. Underlying EPS increased 336% to 9.6c. After incurring restructuring charges and elevated share-based compensation in FY23, H124 provided a cleaner set of numbers. Supply chain issues eased during H1 allowing Datatec to reduce its order backlog by 21% from the end of FY23. The company is seeing strong demand for cyber security and networking solutions, and while challenges still persist in Latin America, it expects FY24 performance to improve versus FY23 for all divisions.

23/10/2023 1 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

Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisors and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting.

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Analysts

Richard Williamson

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Datatec - Operational focus drives H125 profit growth

In H125, while revenue declined due to mix and net revenue accounting, Datatec grew gross profit by 3.5% y-o-y and adjusted EBITDA by 18.5%, resulting in a 56.2% increase in underlying EPS (uEPS). Both Westcon and Logicalis International delivered strong profit growth, while Logicalis Latin America managed to offset lower revenues with reductions in its cost base. Management continues to expect a better financial performance from all three businesses in FY25. We have upgraded our forecasts to reflect the strong H125 performance, lifting FY25 uEPS by 10% and reducing year-end net debt by 12%.

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Datatec - Solid H124 performance supports FY24 outlook

Datatec - Operational focus drives H125 profit growth

Datatec - Better profitability across the board

Datatec - Encouraging H1 across all divisions

Games Workshop Group - A notable acceleration in Q225

Altron - Further margin expansion in H125

Sayona Mining - Catching up with majors

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