Market CapZAR8179.3m

Last Close ZAR37.7

Datatec is a South Africa-listed multinational ICT business, serving clients globally, predominantly in the networking and telecoms sectors. The group operates through three main divisions: Westcon International (distribution); Logicalis (IT services); and Analysys Mason (consulting).

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Investment summary

In H122 Datatec saw strong growth globally, with elevated demand for networking, cyber security and cloud infrastructure. The H122 results show good operational growth across the group, with a notably stronger performance from Westcon after its turnaround. Semiconductor supply-chain issues remain challenging, with the group seeing growing inventory levels and a building backlog of unfulfilled work. However, with technology trends continuing from H122, the outlook for H222 looks promising. Trading on 15.4x FY22 earnings and 3.6x FY22 EV/EBITDA, Datatec looks attractively priced, bolstered by the 512 ZAR cents (c 33 US cents) per share special dividend and with the results of management’s ongoing strategic review as potential upside for 2022.

Y/E Feb
Revenue (US$m)
PBT (US$m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2020A 4214.4 158.7 79.1 9.74 25.2 2.9
2021A 4109.5 118.6 73.1 13.20 18.6 2.8
2022E 4514.0 169.2 84.6 17.16 14.3 5.9
2023E 4757.0 192.6 107.6 25.25 9.7 3.8
Industry outlook

Catalysts for upside have strengthened significantly over the past couple of months with the global IT industry offering attractive defensive growth, leading to significant multiple inflation. Most recently, Exclusive Networks, a competitor to Westcon, set its IPO price at €20, valuing the firm at c €1.8bn (c 25x 2020 EBITDA). Exclusive is cyber security focused and growing rapidly, but our recent SOTP implies a value for Westcon of 9.6x FY22 EBITDA.

Last updated on 02/12/2021
Content on Datatec
Datatec – Operational gearing drives EPS growth
TMT | Flash note | 6 October 2021
XP Power
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Share price graph
Balance sheet
Forecast net debt (US$m) 166.1
Forecast gearing ratio (%) 29
Price performance
Actual 2.3 38.2 64.1
Relative* (2.4) 29.7 34.7
52-week high/low ZAR37.7/ZAR20.7
*% relative to local index
Key management
Jens Montanana CEO
Ivan Dittrich Finance Director

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