Our opinion on the current state of DATATEC(DTC)Here is the text with paragraphs added:
Datatec (DTC) is an international IT and telecommunications company operating in more than fifty countries. It operates in the United States, South America, Europe, Africa, the Middle East, and Asia. Its business is divided into three main divisions - technology distribution through Westcon International, integration and managed services through Logicalis, and consulting and financial services through Datatec Financial Services and Analysys Mason. The CEO, Jens Montanana, is a 10% shareholder.
In its results for the year to 29th February 2024, the company reported revenue up 6.1% and headline earnings per share (HEPS) of 14.2c (US) compared with a loss of 9.3c in the previous period. The company said, "Westcon International continues on its growth trajectory, delivering an exceptional performance in FY24. Logicalis International also performed well, however, Logicalis Latin America faced numerous challenges in Argentina and Brazil, which impacted its financial performance."
In a trading statement for the six months to 31st August 2024, the company estimated that HEPS would be between 58.7% and 74.6% higher than in the previous period. The company said, "Westcon continued its profit growth trajectory and Logicalis International strongly increased profitability."
Technically, the share fell during the COVID-19 pandemic to around 2067c but then rallied to around 4119c. Then the Ukraine crisis took the share down to 3100c on 8th March 2022, but since then, although volatile, it has been recovering. We believe it will continue to perform, especially as the use of artificial intelligence (AI) becomes more widespread.
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Our opinion on the current state of DATATEC(DTC)Datatec (DTC) is an international IT and telecommunications company operating in more than fifty countries. It operates in the United States, South America, Europe, Africa, the Middle East, and Asia. Its business is divided into three main divisions: technology distribution through Westcon International, integration and managed services through Logicalis, and consulting and financial services through Datatec Financial Services and Analysys Mason. The CEO, Jens Montanana, is a 10% shareholder.
On 3rd September 2019, Logicalis announced that it had purchased 70% of Cilnet, a Cisco systems integrator and services management company in Portugal. This acquisition expands Datatec's capabilities on the Iberian Peninsula. Additionally, it acquired Orange Networks in Germany. The company continues to grow by making "bolt-on" acquisitions, including Stelacon in Sweden for $2.6m, Nexia in Norway, and Mars Technologies and Clarotech in South Africa. On 1st June 2021, the company announced the acquisition of Siticom, a 5G company operating in Germany.
In its results for the year to 29th February 2024, the company reported revenue up 6.1% and headline earnings per share (HEPS) of 14.2c (US) compared with a loss of 9.3c in the previous period. The company said, "Westcon International continues on its growth trajectory, delivering an exceptional performance in FY24. Logicalis International also performed well; however, Logicalis Latin America faced numerous challenges in Argentina and Brazil, which impacted its financial performance."
Technically, the share fell during the COVID-19 pandemic to around 2067c but then rallied to around 4119c. The Ukraine crisis took the share down to 3100c on 8th March 2022, but it has been recovering since then. We believe it will continue to perform, especially as the use of artificial intelligence (AI) becomes more widespread.
Our opinion on the current state of DATATEC(DTC)Datatec (DTC) is an international IT and telecommunications company, operating across multiple continents including North America, South America, Europe, Africa, the Middle East, and Asia. The company is structured into three main divisions: Westcon International, which focuses on technology distribution; Logicalis, which handles integration and managed services; and Datatec Financial Services along with Analysys Mason, specializing in consulting and financial services. The company’s CEO, Jens Montanana, holds a significant 10% shareholding.
Recent strategic moves have included the acquisition of 70% of Cilnet, a Cisco systems integrator in Portugal, and Orange Networks in Germany, expanding Datatec’s presence on the Iberian Peninsula and in Germany. Other acquisitions include Stelacon in Sweden, Nexia in Norway, and in South Africa, Mars Technologies and Clarotech, indicating a continuous growth strategy through "bolt-on" acquisitions. A notable acquisition was Siticom in Germany, a 5G specialist, which was announced on 1st June 2021.
For the six-month period ending 31st August 2023, Datatec reported a 14.7% increase in revenue and a 34% rise in headline earnings per share (HEPS). However, the net asset value (NAV) per share saw a decrease of 16.1% to 210c (US). The company highlighted strong performances from its Westcon International division and improvements in Logicalis Latin America, despite challenging market conditions in Argentina and Brazil.
In the most recent trading update for the fiscal year ending on 29th February 2024, Datatec reported a 5.8% increase in group revenue, driven by a 7.6% rise in Westcon and a modest 1.5% increase in Logicalis International. The trading statement for the year projected HEPS to be between 13c and 15c (US), marking a significant improvement from a loss of 9.3c in the previous fiscal year.
The share price trajectory reflects the broader economic impacts, with a decline during the COVID-19 pandemic to approximately 2067c, followed by a rally to 4119c. However, the onset of the Ukraine crisis saw the share price dip to 3100c on 8th March 2022. Since then, the share has been on a recovery path, and the ongoing strategic acquisitions and market expansions suggest a positive outlook for continued performance.
Our opinion on the current state of DTCDatatec (DTC) is an international IT and telecommunications company operating in more than fifty countries. It operates in the United States, South America, Europe, Africa, the Middle East, and Asia. Its business is divided into three main divisions - technology distribution through Westcon International, integration and managed services through Logicalis, and consulting and financial services through Datatec Financial Services and Analysys Mason. The CEO, Jens Montanana, is a 10% shareholder. On 3rd September 2019, Logicalis announced that it had purchased 70% of Cilnet, a Cisco systems integrator and services management company in Portugal. This will expand Datatec's capabilities on the Iberian Peninsula. It also bought Orange Networks in Germany. The company continues to grow by making "bolt-on" acquisitions. It has bought Stelacon in Sweden for $2,6m, Nexia in Norway and, in South Africa, Mars Technologies and Clarotech. On 1st June 2021, the company announced the acquisition of Siticom, a 5G company operating in Germany. In its results for the six months to 31st August 2023 the company reported revenue up 14,7% and headline earnings per share (HEPS) up 34%. The company's net asset value (NAV) fell 16,1% to 210c (US) per share. The company said there was, "Continued excellent Westcon International performance Positive cash flow from operations Strong result from Logicalis International Improved Logicalis Latin America performance UEPS from continuing operations 9.6 US cents (H1 FY23: 2.2 US cents)". Technically, the share fell on the COVID19 pandemic to around 2067c but then rallied to around 4119c. Then the Ukraine crisis took the share down to 3100c on 8th March 2022, but since then it has been recovering.
Datatec showing strong upside after breakout of C&H to R49.21Cup and Handle has formed on Datatec after a couple of months.
Since the price drop, it's been creeping up closing the gap ever so discreetly.
We can even say it's created some type of upward channel.
Either way it's looking bullish and other indicators confirm...
7>21>200
RSI>50
Target R49.21
ABOUT THE COMPANY
Datatec Limited is an international ICT solutions and services group operating in more than 50 countries across North America, Latin America, Europe, Africa, Middle East, and Asia-Pacific
"Datatec" is likely a compound of two words: "data" and "technology" (shortened to "tec")
Founding: Datatec was founded in 1986 by Jens Montanana in Johannesburg, South Africa.
Public Listing: The company was listed on the Johannesburg Stock Exchange (JSE) in 1994. It's also listed on the Alternative Investment Market (AIM) of the London Stock Exchange.
Global Reach: Datatec operates globally through three main divisions: Westcon International, Logicalis, and Analysys Mason.
Westcon International: This division is a technology distributor, specializing in security, collaboration, networking, and data center solutions.
Logicalis: Logicalis is an international IT solutions and managed services provider with a breadth of knowledge and expertise in communications and collaboration; data center and cloud services; and managed services.
Analysys Mason: This division provides specialist consulting and research services to telecoms, media, and technology industries worldwide.
Datatec at an area of valueJSE:DTC reached a 52-week high today, it also broke above a resistance level. If you zoom into the monthly time frame you'll see that it's near a potential resistance as well, old resistance level. I'm bullish on JSE:DTC on D/W time frames, the resistance level could be an issue but it's an old level.
Bullish Sentiment remains Intact (Hold)This is a curious chart. I guess what strikes me is the shares performance over the MRQ.
All signs currently point toward a recovery to the Volume Weighted Average Price (since making it's previous highs).
The Ichimoku Cloud is the only clue as to whether or not prices may find resistance, however I feel there may just be one last push toward the Fib 0.618 or VWAP.
Whichever comes first I suppose.
This seems like quite an aggressive trade, so keep an eye on that Resistance it's just broken. That's where I would look to Exit the trade if I was holding. (Disclaimer, I am holding).
Lastly the MACD is showing no signs of Divergence or Bearishness, so I'm happy to hold for a move toward R43.00
Fingers Crossed!!!
Strong BUY on DATATEC! Expect 3x upside from here! Datatec Limited (JSE:DTC)
Datatec Limited provides ICT solutions and services worldwide. Following the sale of the Westcon Americas businesses to SYNNEX in September 2017, Datatec operates two main divisions: Technology distribution - Westcon International: distribution of security, collaboration, networking and data centre products and solutions; and Integration and managed services - Logicalis: ICT infrastructure solutions and services. Stock is super cheap (16% FCF yield or 0.5x P/B) amid Corona virus pandemic but in the long run, company owns a cash flow machine (Logicalis) and operation that could be sold at a price higher than the total market cap. We think at least 3x upside is possible from the current price! Asset sales & special divided payout could be big catalysts.
Why is the stock super interesting?
• Company has a history of selling assets that make more synergistic sense to other larger buyers; For instance company has sold Westcon Amererica (NA division of Westcon) at US$630M and company paid out US$350M as special dividend and used rest for roll up acquisitions and massive buyback.
• SOTP value implies 3x upside!!: Adding US$270M+US$520M and taking out US$60M of min int equals US$730M and dividing by # of shares of 200mn equals US$3.7/share or ZAR60 / share. This translates to 3x upside. Note that company never traded
· Westcon value: Synnex or other buyer can buy the rest: Back in 2017, company sold 10% of Westcon International (in addition to selling 100% of Westcon Americas) at the value of US$30M. Synnex could buy what’s left of Westcon from Datatec – synnex already owns 10% of Westcon International. Once Synnex experiences synergies created by acquiring Westcon Americas, the organization might naturally desire to purchase the rest of it. Since Synnex paid $30 mn for 10% stake in Westcon International, selling the rest of Westcon International to Synnex (or any other party) would generate roughly $270mn of additional cash for Datatec. Now, this was before the company engaged in big turnaround of Westcon, which means that valuation might be much higher now. What we know is that Westcon Amercas actually had similar revenue level with Westcon international so the latter may be priced at much higher level vs. $270M.
· Logicalis is a cash printing machine and generates EBITDA of 93M annually. Given that peers are trading at 7x EV/EBITDA, even with 20% discount, the EV of Logicalis should be trading at US$520M or this is around 10x P/E.
· Company's cash roughly matches dividends but company has ZAR1B (or US$60M) minority interest.
• Strong management:
· CEO: Multiple records of value add & sale of assets: Mr. Jens Peter Montanana founded Datatec Limited, the parent company of Westcon Group Inc., in February 1986 and has been its CEO since February 1986. Mr. Montanana served as CEO of Logicalis Group Limited from October 2002 to March 1, 2007. From 1989 to 1993, Mr. Montanana served as the Managing Director and Vice-President of US Robotics (UK) operations, a wholly owned subsidiary of US Robotics, now 3Com. In 1993, he co-founded US start up Xedia Corp. in Boston, MA, which was subsequently sold to Lucent Corp. He has been an Executive Chairman at Westcon Group, Inc. since September 18, 2017.
· CFO (Good pedigree): Mr. Ivan Philip Dittrich, BComm, CTA, CA (SA), has been the Chief Financial Officer of Westcon Group, Inc. since September 2017. Mr. Dittrich has been the Chief Financial Officer of Datatec Limited since May 30, 2016. He served as the Chief Financial Officer of Vodacom Group Limited from June 15, 2012 to July 31, 2015. Mr. Dittrich served as the Chief Financial Officer at Datatec Limited from May 1, 2008 to May, 2012. He served as a Company Secretary of Datatec until January 1, 2007 and also served as its Corporate Finance Manager and Group Corporate Director. He successfully managed the Datatec's dual listing in London during 2006. Graduate degree from Oxford.
• Catalysts:
Immediate catalyst could include Latin American listing for Logicalis Datatec is exploring the possibility of listing the Latin American arm of its Logicalis subsidiary on the Brazilian stock exchange, B3. The Latin American business is held 65% by Logicalis and 35% by Promon, with Logicalis expected to remain the majority shareholder if the listing goes ahead.
Source:
JSE:DTC Datatec Could the wait be over?The current reaccumulation in Datatec has taken some time (See posts below) but potentially we are now ready to continue the markup. We have seen a decline in the volume during the reaccumulation indicating the adsorption of the stock. Divergence on the Volume RSI indicates the upward pressure. Now looking for a clear break higher for the markup to continue.