Altron’s AGM trading update confirmed that the positive momentum seen in H224 has continued so far in H125. The company also announced that it had decided to stop the sale process for Altron Document Solutions (ADS) and bring the business back into continuing operations within the IT Services segment. We maintain our forecasts pending further clarity on ADS financials, noting that the business returned to profitability in H224 and is self-funding.

Altron’s FY24 results confirmed good progress with its strategic plan, with headline EPS from continuing operations up 36% y-o-y and well ahead of our forecast. The bulk of restructuring is now complete and has already boosted operating margins from 4.9% in FY21 to 9.0% in FY24. Altron is now positioned to drive revenue and profit growth through a combination of innovation, cross-selling and ongoing operational improvements.

Altron is a South African-based provider of platforms and IT services, helping businesses transform and operate their IT. As part of the plan to refocus on strategic growth opportunities and to improve profitability, management has set ambitious medium-term profit targets. The group has made good progress to date, and we forecast a headline EPS CAGR of 21% from FY23 to FY26e. In our view, this performance is not yet reflected in the current share price. Full FY24 results in May should provide better clarity around individual business performance and we expect the discount to peers to reduce as positive margin progress becomes evident.