Datatec - Robust underlying performance across the board

Datatec delivered a strong operational performance across all divisions in FY21, despite the challenges of COVID-19 and emerging market weakness. The group reported revenues of US$4.1bn down 2.5% y-o-y (a 0.7% fall in constant currency terms), with adjusted EBITDA of US$141m (3.4% margin), down 11% y-o-y. Nevertheless, with strong operating cash flow, net debt fell from US$139.9m to US$60.9m. Underlying EPS was up 37% to 13.6USc per share and the group announced a c 7USc dividend per share, offering a 3.4% yield. Management expects many of the FY21 technology trends to persist in FY22. Software & services will represent the majority of group sales, with the group focused on the growth areas of networking, security and cloud infrastructure. As the global economy recovers, the shares offer good value as a dividend yielding, defensive growth stock.