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BUY ISA HOLD­INGS IS A LOW-KEY SE­CU­RITY tech­nol­ogy spe­cial­ist that has largely built on its core com­pe­tences rather than em­bark­ing on bouts of cor­po­rate ac­tion to bulk up and di­ver­sify its op­er­a­tional base. The record will show that ISA’s sin­gu­lar fo­cus has served it well, al­beit that per­for­mance and re­turns have been steady rather than spec­tac­u­lar. A re­cent cau­tion­ary no­tice, sub­se­quently with­drawn, sparked spec­u­la­tion that ISA might be bought out, though the un­spec­i­fied talks it cited may well also have re­ferred to a small ac­qui­si­tion.

In hold­ing a mar­ket cap­i­tal­i­sa­tion of less than R200m, ISA could be per­ceived as an ap­petis­ing morsel for big­ger tech­nol­ogy or ser­vice com­pa­nies. ISA also presents a com­pelling fun­da­men­tal story, trad­ing on a trail­ing earn­ings mul­ti­ple of about 13 times. While not dirt cheap, this is un­duly mod­est given its profit record, re­as­sur­ing cash-flow gen­er­a­tion and longer-term prospects. And the key growth driv­ers of the in­for­ma­tion se­cu­rity mar­ket are un­likely to stall.

Af­ter re­leas­ing solid year-to-end-Fe­bru­ary re­sults ear­lier this year, CEO Clif­ford Katz — who cer­tainly runs a tight ship — reck­oned that, by lever­ag­ing pos­i­tive sen­ti­ment to­wards the in­for­ma­tion se­cu­rity mar­ket, ISA is “likely to de­liver above-aver­age tan­gi­ble re­turns over time”. A re­cent trad­ing state­ment for the six months to end-August re­in­forces Katz’s view, with ISA ex­pected to re­port head­line earn­ings of about 7.2c/share — up 20% on the cor­re­spond­ing pe­riod last year.

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