STRONG AND WELL-RUN
BASED ON A RECENT trading update, Datacentrix will report headline earnings of between 38,7c (up 35%) and 41,6c/share (up 45%) for the full-year to February when it presents its results later this month. The price ran up by 8% immediately after the news of the trading update to 480c/ share, putting it on a forward price:earnings of between 11,5 and 12,4 times.
The positive update illustrates trends in the environment more generally, with companies upgrading their infrastructure post the Y2k technology refresh cycle. The strong economy has also enabled many companies to upgrade their systems and processes.
Datacentrix would benefit from each of those and, given its empowerment, should be well placed to win further Government infrastructure business (though chairman Gary Morolo has emphasised over the past few reporting periods that’s no longer an advantage for it in the sector).
However, more than benefiting from the trend, Datacentrix is also a strong, consistent and well-run company. It generated R56m in cash from operations during the first six months of its financial year and had cash on hand of R145m. OPPORTUNITIES To expand the ERP business unit, with divisional founder Charl Joubert resigning from the main board to focus on strengthening it. Further growth from market segments, including Government, enterprise systems and selective outsourcing. RISKS Competition from other empowered infrastructure and related services providers.