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 CITY D4T4 DTC DOTD ELCO ESG FDEV GBG IDEA IDOX IMTK IGP IOM KBT KCOM KWS LRM MAI MMX NASA NET PHD QTX QXT RCN 932 SSY SEE SIM SPE SRT STR TAP TAX TEP TPOP TRAK UNG VIP ZOO CYAN ONEV
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 CITY D4T4 DTC DOTD ELCO ESG FDSA FDEV GBG IDEA IDOX IMTK IGP IOM KBT KCOM KWS LRM MAI MMX NASA NET PHD QTX QXT RCN 932 SSY SEE SIM SPE TAX TEP TPOP TRAK UNG VIP ZOO ONEV
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 CITY D4T4 DTC DOTD EGS ELCO ESG FDSA FDEV GBG IDEA IDOX IMTK IMG IGP IOM KBT KCOM KWS LRM MAI MMX NASA NET PHD QTX QXT RCN 932 SSY SEE SIM SPE TAX TEP TPOP TRAK UNG VIP WAND ZOO ARC ONEV
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 CITY D4T4 DTC DOTD EGS ELCO ESG FDSA FDEV GBG IDEA IDOX IMTK IMG IGP IOM KBT KCOM KWS LRM MAI NASA NET PHD QTX QXT RCN 932 SSY SEE SIM SPE TAX TEP TPOP TRAK UNG VIP WAND ZOO ARC ONEV
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 CITY DTC DOTD EGS ELCO FDSA FDEV GBG IDEA IDOX IGP IOM D4T4 KBT KCOM KWS MAI NASA NET PHD QTX QXT RCN 932 SSY SEE SIM SPE TEP TPOP TRAK UNG WAND ZOO ARC ONEV
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 CITY CNS DTC DOTD EGS ELCO FDSA FDEV GBG IDEA IDOX IGP IOM D4T4 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|
Blue Prism has issued a trading statement today that confirms the very strong sales momentum that we are seeing in Software Automation. The strong momentum was highlighted in our recent sector update, “Software Automation- Automating Intelligently” published on the 20th April. We continue to see this as a multi-year growth story and a multi-billion dollar end market, and we continue to expect further upgrades to market forecasts. We retain a Buy rating on PRSM and increase our price target to 2200p from 2000p.
Companies: Blue Prism Group
Delivering infrastructure projects on time, to-spec and within budget has proved a minefield for corporates & politicians alike. Typically, 80% are late and 40% over-spent with little thought on how best to manage the asset once complete. Not exactly ideal, when total running costs over a property’s 25-40 year life, can be >4x the upfront capex. Luckily things are changing...and fast. Here technologies, such as data analytics, IoT, VR/AR, robotics & artificial intelligence, are transforming the $8 trillion global construction market. In turn helping to drive strong demand at Elecosoft (ELCO), a leading BIM (Building Information Modelling) software developer.
eServGlobal enters FY18 with a reduced cost base and a fully funded balance sheet; we are forecasting the core business to be close to EBITDA break-even in FY18. With access to Mastercard’s sales force and financial institution customer base, HomeSend has signed up a number of banks to use its cross-border payment platform. As these banks shift volumes onto the platform, this should drive strong growth in volumes and move the joint venture towards profitability.
The FY 2018 illustrates the strong momentum in the business. The Non Invasive Pregnancy Testing (NIPT) business has started FY 2019 at EBITDA-breakeven with annualised revenues running at £7.7m (+24% up on FY 2018). This excludes growth from existing customers yet to come on stream, the benefit of national reimbursement coverage to NIPT volumes in France (expected H2 2018) and new customer wins in high-volume markets that will be accessible due to new technology that affords a lower-priced NIPT (eg. India). The company also raised £2.5m by way of a placing at 4.5p, which is expected to be sufficient to get to cashflow-breakeven for the group as a whole. Although there remains the uncertainty of litigation with Illumina, the fact that Premaitha is in settlement discussions is positive, whilst growth initiatives are predominantly focused on territories where problematic IP is not in force (67% of revenues). We reinstate forecasts and a target price of 12p.
Companies: Premaitha Health
Prior to the financial crisis of 2008/09, it was widely believed in the stock market that certain sectors – most notably utilities, pharmaceuticals, food retailing and tobacco – were far less vulnerable to market downturns.
Companies: OPM ABZA AVO AGY APH ARBB AVCT BNO BUR CMH CLIG COS DNL EVG GTLY GDR INL KOOV MCL MUR NSF OXB NIPT PHP RE/ REDX SCLP SCE SIXH TRX TON VAL
Sopheon has delivered a very strong 2017 – in line with the previous trading updates, and benefiting from a very good end to the year. The group is ahead of our estimates on all metrics, and is well placed going into 2018 and beyond. Management have signalled their confidence with the welcome introduction of a maiden dividend (2.5p). We upgrade our estimates for both 2018 and 2019.
Actual Experience Interims out. Numbers for the period are largely irrelevant, as the most significant news, ie first large scale customer deployment, was post period end. Revenue did increase 37% to £266k, loss was £3.8m and cash was £14m. We retain our Buy and 450p price target.
Companies: Actual Experience
Following its launch as a mobile data and location intelligence business in September 2017, Location Sciences (LS) has said that management’s revenue expectations for H1 2018 have been met. The online to offline and Out of Home products have been well received and take-up of the new location verification product is ahead of schedule. We are most encouraged that LS’s new products are gaining sales traction in potentially high-growth markets. With no changes to our forecasts, we retain our 0.05p DCF derived target price and Buy rating.
Companies: Location Sciences
How do you decide which equities to buy? Many people rely on the ‘comfort of the crowd’. Preferring to follow what others do to steer them through the markets. Like passive index trackers, this is fine up to a point, say when investing in highly liquid FTSE100 companies. But what about microcaps, where daily trading volumes can be much thinner, and the ‘crowd’ may not exist? Here instead, active fund managers typically focus on the fundamentals and back their own judgement to guide decision-making.
The AGM heard that FY 2017 had seen another year of growth, driven by increased demand for the background and medical checking products and solutions, both direct and through the traditional channel partners. It also laid the foundations for accelerating that growth through enhanced sales and marketing efforts and integration with SAP’s SuccessFactors Recruiting solution, seen as a significant new route-to-market for direct services. Looking ahead, management feels FY 2018 is going to be a pivotal year for ClearStar as revenue growth delivers positive EBITDA, in line with our expectations, after several years of losses. We reiterate our forecasts and 60p TP, offering significant upside to investors.
The MPC faces this dilemma on Thursday. Just a few weeks ago, the decision appeared straightforward. Since, the outcome has become less obvious. A slew of weak economic indicators, not least a slowing of UK Q1 GDP growth to 0.1% point to this conclusion. Markets have rallied, due in part to renewed sterling weakness. We have also seen further M&A activity, especially in the FTSE 100 which may extend to smaller companies, in due course. The results marathon is slowing. In Share News & Views, we comment on Advanced Oncotherapy* Bloomsbury, Cronin*, OnTheMarket* and Synectics*.
Companies: APC BMS CRON CRPR ECSC ESC EUSP FDM GETB PCF SNX SPRP TCN W7L
GetBusy’s maiden results published today were robust, coming in ahead of our forecast at both the revenue and pre-tax level; despite the impact of IFRS 15. Recurring revenue increased to 86% of revenue (83% in 2016) and the number of paying users increased to 57,000 (+11% YoY). Non-UK business, which accounted for a mere 6% of group revenue in 2015, increased to 45% in 2017. We have updated our forecasts for GetBusy and upgraded our Target Price to 48p/ share, +17% higher than our prior 41p TP. We reiterate our Buy rating.
dotDigital has delivered interims to December in line with the January trading update and unchanged EBITDA/adj PBT expectations. The three strategic pillars for growth continue to prove highly effective, delivering 25% revenue growth including 17% organic revenue growth, complemented this year by the Comapi acquisition in November. Geographic expansion, increasing numbers of strong partnerships, and product innovation continue to drive the strong growth as the group excels at current operations and demonstrates the strength of its path to become an omni-channel dataled customer behaviour and analysis platform. Target 115p reiterated.
Companies: Dotdigital Group
eServGlobal changed its year-end from October to December to align itself with its key HomeSend subsidiary. To that end, it has released a set of 14-month accounts to December 2017, detailing the extra two months trading from the October 2017 12-month results, released just after Christmas. The results are weaker than expected; sales of A$12.2m and adj. LBT of A$27.5m, against our forecast of A$12.6m and A$23.4m respectively. The core mobile-money operation has been struggling for some time and although these results are poor, 2017 was a year in which many of the issues in that business were addressed and resolved. It starts 2018 in much better shape and with a brighter future. Investor focus and value lies in the 35.69% of the HomeSend JV with Mastercard. It has pivoted away from MTOs in the remittance market and is gaining momentum in the far larger and more lucrative global payments industry; now with over 20 banks signed and a very exciting pipeline of contracts.
Following a detailed review of the group’s forecasts, ATTRAQT has revised its full year outlook to take a more conservative view on the timing of certain new contracts and the on-boarding timeframe for recent client wins. The pipeline remains strong but conversion has been delayed, resulting in a c.10% reduction in revenue expectations. This would still equate to high single digit organic growth and, importantly, the group remains on track to deliver EBITDA profitability in H2’17. We have temporarily suspended our forecasts while we assess the impact on outer year numbers but with an order book of £2.0M Annualised Contract Value, we believe the group remains well placed to show significant growth in FY’18 and beyond. While today’s announcement is clearly disappointing, growing pains of this nature are not uncommon in early stage growth businesses and we remain excited about the group’s opportunity to address the 56,000 online retailers it can target with its technology.
Companies: Attraqt Group