ZAR5398.9m market cap

ZAR26.8 last close

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).

Investment summary

Datatec is a global IT services and solutions provider, operating in over 50 countries through three divisions, Logicalis (IT services), Westcon International (technology distribution) and Analysys Mason (consultancy). Benefiting from technology trends (security, networking, cloud, unified communications), management expects revenue growth of 4–6% in the medium term driven by investment in software and services. Datatec trades at a substantial discount to its peers, trading on a valuation that neither reflects Datatec’s recent transformation nor its future growth prospects.

Y/E Feb
Revenue (US$m)
PBT (US$m)
EPS (c)
P/E (x)
P/CF (x)
2019A 4332.4 86.8 65.7 2.95 59.1 13.6
2020A 4304.8 158.7 79.1 10.59 16.5 2.1
2021E 4258.4 136.5 67.0 10.15 17.2 3.5
2022E 4418.9 165.0 84.6 16.39 10.6 3.5
Industry outlook

While a challenging global economic environment may affect top-line growth in the short term, Datatec’s high variable cost base and resilient business model should mitigate the impact on its underlying performance. We expect Datatec to continue to benefit from the streamlining of its operations and cost base, with progressive margin improvement at Logicalis and improving profitability at Westcon.

Last updated on 14/01/2021
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Share price graph
Balance sheet
Forecast net debt (US$m) 126.8
Forecast gearing ratio (%) 19
Price performance
Actual 7.6 17.9 (17.2)
Relative* 0.3 2.2 (24.8)
52-week high/low ZAR36.0/ZAR18.2
*% relative to local index
Key management
Jens Montanana CEO
Ivan Dittrich Finance Director

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