Currency in ZAR
Last close As at 08/06/2023
ZAR38.58
▲ 1.20 (3.21%)
Market capitalisation
ZAR8,677m
Research: TMT
Datatec reported group continuing revenue growth of 13% for FY23 (20% in constant currency) with adjusted EBITDA from continuing operations also increasing 13%. Supply chain issues started to ease allowing the company to accelerate delivery of its order backlog. Demand remained robust, resulting in a flat order backlog at the year-end, despite double-digit revenue growth. At a divisional level, Westcon delivered excellent results, Logicalis International performance was solid and, while down for the year, Logicalis LatAm rebounded in H223. Management expects all divisions to deliver improved performance in FY24; we are reviewing our forecasts.
Datatec |
Starting FY24 in a strong position |
FY23 results |
Software & comp services |
23 May 2023 |
Share price performance Business description
Analyst
Datatec is a research client of Edison Investment Research Limited |
Datatec reported group continuing revenue growth of 13% for FY23 (20% in constant currency) with adjusted EBITDA from continuing operations also increasing 13%. Supply chain issues started to ease allowing the company to accelerate delivery of its order backlog. Demand remained robust, resulting in a flat order backlog at the year-end, despite double-digit revenue growth. At a divisional level, Westcon delivered excellent results, Logicalis International performance was solid and, while down for the year, Logicalis LatAm rebounded in H223. Management expects all divisions to deliver improved performance in FY24; we are reviewing our forecasts.
Year end |
Revenue |
PBT* |
Diluted EPS* |
DPS |
P/E |
Yield |
02/21** |
4,109 |
73.1 |
13.2 |
6.6 |
14.3 |
3.5 |
02/22 |
4,546 |
69.1 |
14.2 |
39.3 |
13.3 |
20.7 |
02/23 |
5,143 |
72.6 |
19.5 |
77.7 |
9.8 |
40.5 |
02/24e |
5,282 |
95.6 |
23.3 |
7.5 |
8.1 |
4.0 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Includes Analysys Mason.
For continuing operations, Datatec reported revenue of $5.14bn (+13.1% y-o-y or +20.3% in constant currency (cc)), 3% ahead of our forecast. EBITDA from continuing operations was $98.2m (-32% y-o-y) and adjusted EBITDA was $180.3m (+13% y-o-y), which compares to our $175.2m forecast. Adjusted EBITDA excludes $52.6m in share-based payments, $15.2m in restructuring charges, $2.3m in acquisition/integration/ corporation action costs and $11.9m in one-off tax items. As previously reported, underlying EPS (including discontinued operations) was 7.9c (FY22 18.7c). The final dividend was calculated based on underlying EPS before share-based payment charges, that is, 29.5c (FY22 27.4c), and based on dividend cover of 3x, a dividend of 10c/195 ZARc was declared.
At a divisional level, Westcon revenue of $3.42bn (+18.3% y-o-y, +25.4% cc) was 5% ahead of our forecast with adjusted EBITDA of $95.1m, 3% below our forecast. Logicalis International revenue of $1.23bn (+8.7% y-o-y, +16.0% cc) was in line and adjusted EBITDA of $66.2m was 2% below our forecast. Logicalis LatAm revenue of $0.5bn (-6.1% y-o-y, +1.2% cc) was 6% below our forecast and adjusted EBITDA of $24.9m was 1% below our forecast. The group closed the year with a net debt position of $106.6m, down 20% compared to net debt from continuing operations a year ago. Working capital requirements grew at a slower rate than revenue, helped by good management of inventory and receivables and more favourable payment terms from suppliers.
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Research: Industrials
Following the demerger of Dowlais automotive, Melrose Industries is a focused aerospace group with a retuned strategy, still with shareholder value at its core, to develop its capabilities long term as a focused entity. The flexion point in the aftermarket partnerships, benefits from the operational actions and the accelerating recovery in the aerospace market provide strong positive dynamics for Melrose. Profit is set to expand significantly, well beyond the pre-acquisition levels, fuelling a balance sheet capable of significant cash returns to shareholders.
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