Shares in Datatec rose more than 7% on Wednesday as the technology group flagged double-digit half-year sales growth on Wednesday, as demand for networking software for remote workers offset the effect of the global microchip shortage.
Datatec, whose operations span more than 50 countries, has two main divisions: Logicalis and Westcon International (WI), which distributes security and networking technology products.
The stock is two thirds higher than it was a year go at R35.33, but that is still a far cry from the R137 it commanded at the turn of the century and less than half of almost R77 in 2015.
Much of this negative perception has been attributed to its international operations — the bulk of its business — which had struggled over the last decade to be profitable, resulting in a series of corporate actions to slim down the group.
By comparison, Telkom — which houses IT business BCX — is valued at R18.58bn, having made about R43bn annual sales. Datatec on the other is only valued at R7.2bn, though it made earned R58.7bn in the last year, on track to beat that in the current.
In afternoon trade on Wednesday, Datatec shares were 7.06% stronger.
Chip shortage
Over the past year-and-a-half, the growth in technology use and disruptions in supply chains have resulted in demand outpacing supply of semiconductors or microchips, which are critical components in modern day electronics and vehicles.
Against this backdrop, Datatec told investors on Wednesday that it had grown in the first half of the financial year but that shortages had negatively affected its hardware business.
In a trading update, the group said it achieved “strong operational performance” as it continued to benefit from remote working, increased cloud usage and secured networking trends.
Group revenue is expected to be about $2.255bn (R32.4bn) for the period, compared to $1.963bn in the previous corresponding period, representing a 15% year-over-year increase.
“Revenues would have been higher if not for the global semiconductor shortage, which has created extended lead times on certain product hardware deliveries,” in the first half, Datatec said.
As a result, “closing backlog — sales orders waiting to be fulfilled — grew significantly in both the Logicalis and Westcon International divisions.”
During the period, revenue for Logicalis grew 19% to $822m, while Westcon International had 12% higher revenues at $1.39bn compared to 2020’s $1.24bn. Analysys Mason — the group's consulting unit — had a 34% increase in revenue to $43m.
The company aims to release its financial results for the period at the end of October.
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