Shares in technology group Datatec fell 5% in afternoon trade on Wednesday as the group said the Covid-19 pandemic has had a mixed effect on its various businesses, resulting in a slight fall in group revenue during its six months to end-August.
Datatec stock, down 37.6% so far this year, closed 4.92% weaker at R20.67, valuing the group at R4.16bn.
Group revenue fell 1.2% to $2.03bn (R33.58bn) to end-August, with Westcon International subsidiary benefiting from increased demand for online services.
Adjusted earnings before interest, tax, depreciation and amortisation stood at $66.7m for the period, down from $70m in the previous comparable period.
Westcon, which saw revenue rise 4% to $1.3bn, offers services including networking and security.
Logicalis, which also provides services such as networking, saw revenue fall 10% to $700m, with the group reporting increased revenue in Europe, but reduced revenue elsewhere. Latin America was adversely hit by foreign exchange movements.
Headline earnings per share for the six months to end-August are expected to fall by between 17% and 35% lower than the prior period’s 2.3 US cents, the group said.
Peter Takaendesa, head of equities at Mergence Investment Managers, said as the period under review covers the months affected the most by Covid-19. Datatec had not “been immune to that although underlying operational performance excluding currency effects appears to have been resilient”.
He said the key numbers to look at were the adjusted ebitda, which was down about 4% in dollars, and Westcon’s continued turnaround.
“The underlying earnings per share numbers look much weaker due to one-off tax benefits in the prior year and dragged further by the impact of operational leverage.
“Detail in the results to be reported later this month and an update on the implementation of the communicated value unlock strategy will be key to investors,” Takaendesa said.
“Further progress on cash generation and the way forward with asset realisations are valuation drivers over the next few years. We still expect them to list Logicalis Latam [Latin America] operations when market conditions have settled and when those markets have recovered meaningfully in USD terms,” Takaendesa said.
With Karl Gernetzky
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