Market CapZAR6936.5m

Last Close ZAR34.14

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

After the announcement of Datatec’s strategic review on 25 August 2021, our sum-of-the-parts valuation note indicated that continuing strong industry growth globally provided reassurance for Datatec’s H122 results. This has been borne out with management confirming it expects H122 revenue to rise by 15% y-o-y to c US$2.26bn (H121: US$1.96bn). For comparison, H121 was 48% of FY21 revenues, with H122 52% of our FY22 estimate. This strong performance was seen across all divisions, with revenues for Logicalis rising 19% y-o-y, Westcon 12% and Analysys Mason 34% as the group continued to benefit from remote working, increased cloud usage and secured networking trends. Datatec is operationally geared, so we expect this top-line performance to be even stronger at the EBITDA and earnings levels. We see scope to upgrade our estimates but will wait for the full H122 results, due around 28 October 2021.

Y/E Feb
Revenue (US$m)
PBT (US$m)
EPS (c)
P/E (x)
P/CF (x)
2020A 4214.4 158.7 79.1 9.90 23.5 2.7
2021A 4109.5 118.6 73.1 13.56 17.2 2.7
2022E 4316.5 163.1 79.1 16.50 14.1 4.9
2023E 4548.5 185.3 101.6 24.85 9.4 4.8
Industry outlook

The global IT industry offers attractive defensive growth, leading to significant multiple inflation over the past six to 12 months. As the global recovery gathers pace, we expect Datatec to continue to deliver progressive margin improvement and improving profitability from the streamlining of its operations and cost base. Investors have yet to recognise the progress made by Datatec.

Last updated on 17/09/2021
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Share price graph
Balance sheet
Forecast net debt (US$m) 84
Forecast gearing ratio (%) 12
Price performance
Actual 28.2 21.4 46.2
Relative* 40.6 28.6 28.0
52-week high/low ZAR35.1/ZAR20.7
*% relative to local index
Key management
Jens Montanana CEO
Ivan Dittrich Finance Director

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