Datatec Limited (JSE: DTC) demonstrates a robust financial performance with a year-to-date increase of 20.29%. The recent acquisition of an additional 40% stake in Mason Advisory Limited signifies a strategic move for the company’s expansion as the IT giant looks to supplement the impressive organic growth with strategic acquisitions.
Datatec Limited has delivered a compelling first half of FY24, showcasing remarkable growth across revenue and earnings, exceeding expectations. Revenue surged 15% year-over-year, reaching an impressive US$2.76 billion, fuelled by strong performance across all divisions. Notably, earnings per share skyrocketed by 166.7% year-over-year, reaching US$0.063, demonstrating significant growth potential.
Further bolstering Datatec’s positive outlook is the improvement in gross margin, now at 15.1%, driven by stable foreign exchange rates and strategic hedging initiatives. This positive momentum is expected to continue throughout FY24, with all divisions anticipated to deliver improved performance compared to FY23.
While Datatec opted to skip the interim dividend to prioritize cash conservation for strategic growth initiatives, this decision does little to dampen the overall optimistic outlook.
Technical Analysis:
Datatec Limited currently trades at R37.32, displaying a bullish trend. The recent break above the 50-SMA, 100-SMA, and 200-SMA indicates a strong upward momentum. The RSI trending at 45.14 suggests a potential for further upward movement.
A sustained push higher could open trading opportunities towards the R37.90 resistance level. A breakthrough in this resistance may trigger a run towards R38.58 and R39.49. Conversely, failure to sustain the push above SMAs might lead to short-term trading opportunities around the R35.37 support level, potentially testing the R34.51 support level.
Summary:
Datatec Limited presents an optimistic outlook backed by strong financials and strategic acquisitions. The current price action signals a potential for further upward movement, targeting resistances at R37.90, R38.58, and R39.49. However, investors should be vigilant around support levels, particularly R35.37 and R34.51, for potential reversals.
Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire, Datatec, IOL, MT Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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