Datatec shares rise as demand for remote access computing soars

Shares in technology group Datatec rose by more than a fifth on Friday, as the company said demand for its remote access computing had increased over the last few weeks and has reduced its net debt over the last financial year.

In a business update released on Friday, Datatec said there was “solid” financial performance in all of its divisions for the year to end-February.

The company, run by CEO Jens Montanana, is in the process of finalising its financial results for the period.

In early afternoon trade, shares in Datatec were 30.3% higher at R23.78, giving the technology firm a market value of R4.47bn.

The company, whose SA operations account for just 2% of its total business at the moment, said the turnaround in its Westcon International unit continued, with a substantial improvement in profitability over the financial year. The subsidiary is said to be a value-added distributor of security, collaboration, networking and data centre solutions

Logicalis, its IT solutions and managed services unit, is also expected to produce strong results, especially in its Latin America region, the company said.

Locally, Logicalis has made two acquisitions recently. It bought Mars Technologies, a technology services business, and Clarotech, an IP telephony cloud and managed services business based in Cape Town.

The group’s balance sheet remains strong and is expected to report a reduction in net debt for the year, compared to the first six months, it said.  

Datatec generated $77.8m (R1.3bn) for the six months to August, bringing its total cash and cash equivalents to $295m. 

Currently, Datatec said order intake for Westcon has been ahead of this time in 2019 for the first weeks of the 2021 financial year, while in Logicalis, order intake for March is expected to be ahead of March 2019.

The group is actively monitoring the coronavirus outbreak “to ensure the safety of all our employees and customers” in addition to following the World Health Organisation (WHO) and local country and government guidelines.

“So far we have experienced limited supply chain interruptions. We are seeing increased demand for our remote access computing, security and collaboration networking solutions,” said the company.

Like many other businesses locally and internationally, Datatec has closed a number of its offices, encouraging most of its employees to work remotely where possible, while promoting social distancing and has restricted business travel.

“Our warehouses are still functioning with new protocols for care and safety of our people,” it said.

gavazam@businesslive.co.za