Datatec - Potential strategic sale of Analysys Mason

FY22 was a year of robust global demand for technology solutions, with supply chain issues and semiconductor shortages constraining Datatec’s ability to meet that demand, leading to a growing backlog of pending orders. Datatec’s three divisions all had a strong year, which would have been even stronger for Westcon and Logicalis if orders could have been fully met. We note management’s cautious tone on H123 in particular, although we believe Datatec remains a defensive player in an uncertain world (strong dollar, price and wage inflation, the war in Ukraine, lockdowns). Off the back of FY22, we have raised our revenue estimates, but remain cautious on margins. Datatec still trades on only c 3.5x FY23 EV/adjusted EBITDA, which we believe understates the group’s prospects and recent performance. As a result of the strategic review, management is in negotiations on the potential sale of Analysys Mason.