Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on Datatec. We currently have 14 research reports from 2 professional analysts.
The Group has reported H1 18 EBITDA of US$7.7m, down from the US$24.4m reported in the same period last year.
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This quarter we use finnCap’s Slide Rule to provide both top-down and bottom-up analysis of the UK’s Technology and Telecoms sectors. Our findings are very reassuring: the Tech sector scores the best (across all sectors) when considering Growth and Quality – Taptica*, Frontier Developments* and dotDigital* in particular stand out on these metrics. Given these attractive characteristics and growth prospects, the Tech sector is unsurprisingly one of the most expensive – currently trading at 17.2x FY1 EV/EBIT and 23.8x FY1 P/E, versus 15.0x and 18.5x respectively for the wider market. Despite valuations appearing high, we believe there are value opportunities. For example, Proactis* features in finnCap’s QVGM+ portfolio (ranked 17/462) – the company offers attractive organic and inorganic growth, with earnings forecast to grow by 26% CAGR over the next two years, but despite this, only trades on 15x FY1 earnings and offers 8% FCF yield in FY2.
Companies: 7DIG ALT AMO ARTA BOTB BLTG CTP CFHL CYAN ISL DTC DOTD ELCO ESV FDEV GBG IDEA IDOX IMTK IGP IOM KBT KCOM KWS LRM MAI MMX NASA NET ONEV PHD QTX QXT RCN 932 SSY SEE SIM SPE SRT STR TAP TAX TEP TPOP TRAK UNG VIP ZOO
The Group's subsidiary Westcon-Comstor is struggling in EMEA and North America.
Bioventix* (BVXP): Strong trading update (CORP) | Central Asia Metals (CAML): Intended transaction and suspension of trading (U/R) | InnovaDerma* (IDP): Solid operational update (CORP) | Tax Systems* (TAX): Evolution continues (CORP) | Datatec* (DTC): Completion of Westcon-Comstor disposal (CORP) | SimiGon* (SIM): Encouraging contract from The FAA (CORP)
Companies: BVXP CAML IDP TAX DTC SIM
Gem Diamonds (GEMD): Large diamond recovered at Letšeng mine (BUY) | Datatec* (DTC): Year-end trading update and possible sale of Westcon-Comstor (CORP)
Companies: Gem Diamonds Datatec
Enterprise-focused niche applications of tech illustrate how, while trends appear to be fluctuating away from the current poster children of fintech and the Internet of Things, in fact these developments are refining appropriate application of existing technologies.
Companies: 7DIG AMO ARTA BVC BOTB CTP CFHL ISL DTC DOTD ELCO ESV FDSA FDEV GBG IDEA IDOX IMTK IGP IOM KBT KCOM KWS LRM MAI MMX NASA NET ONEV PHD QTX QXT RCN 932 SSY SEE SIM SPE TAX TEP TPOP TRAK UNG VIP ZOO
ICT evolution is driven by technological development as advances are made which both meet and shape customer requirements. Our 2011 note No such thing as a telco described the modern reality in that former ‘telcos’ now deliver varying elements of a range of managed services. We built on this theme last year, exploring in further detail their evolutionary paths, operating fundamentals, and cashflow yield similarities. In the consumer environment, demand for bundles of technology is complemented by demand for content. Across the pond, the mooted combination of AT&T and Time Warner typifies the bundled need of ‘pipe’ and content, since unbundled alternatives such as FaceTime and WhatsApp can be easier and clearer to chat over, and Amazon and Netflix are easier to watch anywhere. In the UK, BT’s defensive actions cover delivery, content and capabilities, acquiring EE yet also buying football rights. While TV was long ago added to triple play to become quad play, voice is now merely an app, and fixed and mobile seen as just dumb pipes: it's the content that will influence consumer choices. Growth of TV and film as well as music and gaming over IP leads to UK small cap opportunities. In context of the drive to maximise value from pipes and access by offering content and data, we look at some amongst the potential tech small cap beneficiaries: Amino*, Keyword Studios, ZOO Digital*, 7digital*, KCOM* and CityFibre*.
Companies: 7DIG AMO ARTA BVC BOTB CTP CFHL ISL DTC DOTD EGS ELCO ESV FDSA FDEV GBG IDEA IDOX IMTK IMG IGP IOM KBT KCOM KWS LRM MAI MMX NASA NET ONEV PHD QTX QXT RCN 932 SSY SEE SIM SPE TAX TEP TPOP TRAK UNG VIP WAND ZOO ARC
Datatec’s interims to August repeated the underlying detail revealed at the September trading update: the board looks to a sequentially and comparably stronger 2H17 and FY17, with revenue of $3.04bn showing a 7.6% decline vs 1H16 but at a gross margin of 13.8% (1H16: 13.1%), highlighting the challenges faced in a macro environment dominated by the effects of the strong dollar. The 1H dividend has reverted to match the unchanged existing dividend policy (exceeded since 2012) from 8 USc to 4.2 USc, to maintain a fixed three-times cover relative to underlying earnings. While FX has challenged the business momentum, it has benefited the sterling translation effect and therefore we retain our 400p target. Evidence of gentle LatAm recovery to the benefit of revenue, an improving product mix to the benefit of gross margin, and efficiency gains in opex due to the ERP, BPO and other initiatives, all lead to optimism for recovery for Datatec into 2H17 and FY18.
Mobile money has been slow to deliver but investors need to stay engaged as there are plenty of reasons as there are plenty of reasons for success. Mobile penetration and network coverage are growing inexorably and where communication leads, transactions follow, as e-commerce has proven. Banking and payments lead the way but it will embrace other financial services too, from insurance to cross-border remittance. Slowly but surely, mobile money is coming of age.
Companies: 7DIG AN/ AMO ARTA BVC BOTB CTP CFHL ISL DTC DOTD EGS ELCO ESV FDSA FDEV GBG IDEA IDOX IMTK IMG IGP IOM KBT KCOM KWS LRM MAI NASA NET ONEV PHD QTX QXT RCN 932 SSY SEE SIM SPE TAX TEP TPOP TRAK UNG VIP WAND ZOO ARC
After a challenging year driven negatively by macro-economic circumstances beyond company control, the Datatec board has reiterated confidence with a maintained dividend. The one-off FX cost in Angola will not recur and we can see no further similar situations; the Westcon restructuring and BPO transformations are mostly complete, which will enhance margins and efficiencies; and challenged emerging markets businesses have been right-sized accordingly. Logicalis enjoyed strong second-half margins and strength in the US and Europe. With growth initiatives and margin focus, it is now a question of proving the execution and restoring confidence. Target 400p reiterated.
This quarter's topic: Feasting on Red Tape. 2016 harbours every chance of being a stultifying year, given the imminent local and London mayoral elections, the looming hurdle of Brexit, the summer doldrums, the bizarre potential outcome of the US presidential election and then the home strait to Christmas. Excuses for inactivity abound with regard to spending IT capex budgets.
Companies: 7DIG AN/ AMO ARTA BVC CTP CFHL DTC DOTD EGS ELCO FDSA FDEV GBG IDEA IDOX IGP IOM ISL KBT KCOM KWS MAI NASA NET ONEV PHD QTX QXT RCN 932 SSY SEE SIM SPE TEP TPOP TRAK UNG WAND ZOO ARC
This quarter’s topic: Automotive Technology. With the Mobile World Congress approaching at the end of this month and likely to feature so many automotive applications to the extent it should perhaps be renamed the Mobile World of Cars, we examine the growing impact of technology in the automotive industry, from telematics to connected cars and autonomous vehicles.
Companies: 7DIG AN/ AMO ARTA BVC CFHL CNS DTC DOTD EGS ELCO FDSA FDEV GBG IDEA IDOX IGP IOM ISL KBT KCOM KWS MAI NASA NET PHD QTX QXT RCN 932 SSY SEE SIM SPE TEP TPOP TRAK UNG WAND ZOO ARC CTP
SCISYS*: H2 confirms recovery (CORP) | Aukett Swanke*: Choosing the moment (CORP) | Independent Oil & Gas*: Skipper licence extension and share issue (CORP) | Datatec*: Ten-month update (CORP) | Penna Consulting: Analyst interview (BUY)
Companies: SSY AUK IOG DTC PNA
Datatec interims to August were well flagged by trading updates in July and September, having indicated FX and margin pressure. Group revenue growth of 10.1% included organic revenue growth of 8.5%, however EBITDA (Datatec measure, post SBP) declined 11% due to the fall-out from US dollar currency exposure, weakness in the high-margin Latin American region, and growth in lower-margin US product sales. Remedies are in hand to correct or minimise further impact and lift the trajectory back up going into FY17, however there are inevitable downgrades (-15%) to FY16 (February year-end) EBITDA. Target 400p (450p).
Research Tree provides access to ongoing research coverage, media content and regulatory news on Datatec. We currently have 14 research reports from 2 professional analysts.
|07Dec17 07:00||RNS||Cancellation of AIM listing|
|04Dec17 13:00||RNS||Holding(s) in Company|
|01Dec17 12:00||RNS||Notification of major interest in shares|
|30Nov17 14:00||RNS||Dealing in securities by a director|
|30Nov17 13:00||RNS||Notification of major interest in shares|
|29Nov17 07:00||RNS||Special cash dividend|
|13Nov17 07:00||RNS||Half-year Report|
In July 2017, we highlighted the progress that AIM made in the first half of the year. We are now reviewing the performance over H2 2017. The latest AIM Statistics published yesterday show that there are currently 960 companies, with 80 new issues in 2017, raising £1.58bn and secondary issues raising a further £4.7bn. However, with 102 companies cancelling their listing there was a net 22 fall in 2017 as a whole. It appears that both the trends of new issue momentum and de-listings are set to continue in 2018. In Share News & Views, we comment on APC Technology*, ECSC Group* and IG Design.
Companies: APC BMS CRPR ECSC EUSP FDM GETB PCF SNX SPRP TCN W7L
Arden Partners is soon to initiate full coverage of Cloudcall. We report on the Trading Update RNS released this morning, with full forecasts and initiation report to follow.
Companies: Cloudcall Group
The acquisition of Perfect has transformed PROACTIS into a genuinely global player. However, the company is not resting on its laurels - new CEO Hampton Wall has set out an ambitious plan to continue the aggressive growth through a combination of organic growth and further earnings enhancing acquisitions. This note explains the rationale behind this strategy and assesses its feasibility. If execution continues, there is the potential for further significant value creation.
A look back at our 2017 ideas In aggregate our analyst picks outperformed the FTSE All Share last year by 9% and the cumulative performance of our portfolio over 6 years would have given a total return of 300% (almost double the return on the FTSE All Share). In addition, many of our top-down themes played out very well such as our focus on secular growth in Tech, Life Sciences, Healthcare and Financials, an increase in M&A, our cautious stance on the Consumer and especially our bet on continued strength in the Industrials last year and solid growth in the global economy. What does 2018 have in store? We continue to play ongoing secular growth themes in Tech, Life Sciences, Healthcare and Financials. In addition, we tap into domestic areas of cyclical strength such as regional construction and house building, plus self-help initiatives and potential market share gains. We maintain a favourable view of Industrials given the global economic backdrop but think this could moderate during the year. Other changes of nuance include the potential for a better H2 in the Consumer sectors, which remain under pressure for now, and a better outlook in Media from a mini-quadrennial year in 2018.
Companies: AMO AVG CBP CVSG DNLM EKF FENR IOM SAA GLE PURI SFR PGIT PURI SFR SOG VRP
The latest Office for National Statistics (ONS) survey, ‘Ownership of UK quoted shares: 2016’, shows that retail investors are more important than most company managements realise or most capital markets professionals admit. When it is also appreciated that the data shows that retail investors set the share price for most quoted companies, most days, it becomes clear that engaging with such an audience enhances a company’s standing, whilst ignoring them courts disaster.
Companies: OPM ABZA AVO AGY APH ARBB AVCT BUR CMH CLIG COS DNL EVG EHP INL MCL MUR NSF OBT ODX OXB PPH NIPT RE/ REDX SCLP SCE SIXH TRX TON VAL
PROACTIS has, via its wholly owned subsidiary Perfect Commerce, filed a tender offer for the remaining 21% of Perfect Commerce’s 79% owned subsidiary Hubwoo. This has no impact on our forecasts aside from the c€5.6m consideration, which we will reflect in our estimates once the offer completes. A trading update is due out mid February and the market will be looking for reassurance that the integration of Perfect Commerce is progressing as planned. The shares continue to look undervalued, but a weakening dollar does represent a headwind.
IQE’s pre-close trading update noted that management expects FY17 revenues to be ahead of market expectations. Noting that the upgrade is driven by delivery of volume epitaxy on a programme that we infer is the new iPhone X, a programme which will continue throughout FY18, we raise our revenue estimates for both FY17 and FY18, but keep EPS numbers unchanged as the proportion of licence revenues in the mix is lower.
WANdisco’s strong bookings momentum ($22.5m, +45%y-o-y, vs Edison $21.7m) in FY17 was more than matched by the strategic progress during the year. For the core big data business we upgrade our bookings estimate by 21% and now forecast 40%+ y-o-y bookings growth for FY18 and FY19, partially offset by a de-focus on the legacy SCM business. The company’s platform for growth looks exceptionally strong and we see scope for a further acceleration driven by adoption of Fusion for more use cases, sales through more partners and supported by very attractive market dynamics.
The AIM Healthcare index has shown positive returns in all but three out of the past 11 years (2007, 2008 and 2011), growing at a CAGR of 7.6% over the period. This compares with a CAGR of -0.3% for the broader FT AIM All Share, +0.6% for the AIM 100 and +3.5% for its more senior FT All Share Health index. Sector growth and relative performance to the AIM All Share index has accelerated over the past five years; the sector having risen 19.19% CAGR since 1 Jan 2012. This compares with 6.8% growth in the AIM All Share and 6.1% in the FT All Share. This outperformance can be attributed to the increasing success amongst the Healthcare constituents which have progressed their business plans to a point where substantial value has been/is being created and where many companies have successfully scaled their businesses to sustain future growth. We highlight four companies that have different business models but exemplify the opportunities that are increasingly becoming evident within the sector.
Companies: ABZA AKR AGY APH AGL AVCT BVXP COG CTH IHC LID MTFB ODX OPTI NIPT PRM SDI STX SNG TSTL
Bango has announced that it is providing resale and bundling technology for Amazon in India, enabling Bharti Airtel mobile customers to sign-up to Amazon Prime. The launch represents an expansion of the Bango Platform (“BP”) beyond Direct Carrier Billing (“DCB”), and also increases Bango’s exposure to a sizeable mobile and e-commerce market. The release contains no details on the contract terms and we make no changes to forecasts at this stage. Continuing Bango’s recent trend of contract wins with top-tier internet players, in our view the contract demonstrates the ongoing momentum in the Bango business and the versatility of the BP.
PRSM has released a trading update this morning and the strong momentum of H1 has actually increased. We are upgrading our revenue forecasts substantially and we are increasing our PT to 1750p from 1250p.
Companies: Blue Prism Group
Instem this morning released an in-line trading statement for the 2017 year. The group is seeing traction across a number of fronts, including a recovery in the Clinical business, with two Alphadas orders in the period. The company has also today announced a material SEND contract win with a top-5 global non-clinical CRO. We make no changes to estimates for 2018 and beyond, but look forward to seeing further detail on progress at the time of results in March.
2017 reflected the investments being made to ready the group for scaled deployment through its partners. All indications point to 2018 as being that inflexion year. Few companies have the potential to deliver the revenue scaling profile we believe AE can deliver – not just through deployment in their partners’ customers but also by being embedded in their software/ hardware. The opportunity remains as exciting as ever with prospect of news flow in 2018 bearing testament to that.
Companies: Actual Experience
Eckoh’s interim results showed strong progression year on year across all key metrics driven by continued strong momentum in its US Secure Payments business. The group won another 7 contracts in this area worth $5.1m, both metrics significantly up y-o-y. With all contracts won on the preferred opex-style pricing model, the order book and visibility is also growing. We made no changes to our forecasts and believe the opportunities remain significant given the regulatory backdrop, increasing awareness of the risk and costs associated with security breaches and the group’s strong competitive positioning. We see another year of strong progress.
In our third edition of Trend spotting we stick with our suggestion at the end of March to up European exposure and we review the recent market moves and macro trends. We comment on the recent strong performance of our growth, quality and momentum styles which we expect to continue and we examine what happened to sectors around the last general election period in 2015, adding some new colour.
Companies: AUG GNS IQE NTG SDL SPH SDY TRI VEC XAR GHT BOY CRW EMIS VCT ECK GLE GHH DATA AVON CHH DPH HILS SDM ZYT MUR RPS LWB EKF SUN UDG SYNT CINE DOTD MPM FUM CLIN RENE ATQT SERV ERGO BCA BUR DRV SCS JUP FDP GBG GTLY HW/ EAH SFR PHD CXENSE KNOS NETD G4M GFIN ULS RHL RAT FEN LOOP MYSL FUTR