Datatec - 15% y-o-y growth in H122, with buoyant demand

After the announcement of Datatec’s strategic review on 25 August 2021, our sum-of-the-parts valuation note indicated that continuing strong industry growth globally provided reassurance for Datatec’s H122 results. This has been borne out with management confirming it expects H122 revenue to rise by 15% y-o-y to c US$2.26bn (H121: US$1.96bn). For comparison, H121 was 48% of FY21 revenues, with H122 52% of our FY22 estimate. This strong performance was seen across all divisions, with revenues for Logicalis rising 19% y-o-y, Westcon 12% and Analysys Mason 34% as the group continued to benefit from remote working, increased cloud usage and secured networking trends. Datatec is operationally geared, so we expect this top-line performance to be even stronger at the EBITDA and earnings levels. We see scope to upgrade our estimates but will wait for the full H122 results, due around 28 October 2021.