Has Data# 3 Limited been maintaining the longer-term growth trend?

Team Veye | 21 Feb 2020 ASX - DTL
Has Data# 3 Limited been maintaining the longer-term growth trend?

Data# 3 Limited (ASX: DTL)

Data# 3 delivers strong earnings growth

Australian business technology solutions leader Data# 3 Limited (ASX: DTL) on 19 February 2020 announced its results for the six months ended 31 December 2019 (1H FY20). These results saw the company deliver strong earnings growth, at the top end of the previous guidance range.

(Graphic Source – Company Reports)

1H FY20 – growth across all key metrics:

  • Total revenue up 11.6% to $718.9 million, including $251.9 million of public cloud revenues 
  • NPBT up 40.6% to $12.7 million 
  • NPAT (excluding minority interests) up 41.5% to $8.7 million 
  • EPS up 41.5% to 5.65 cents per share 
  • Interim fully franked dividend up 41.7% to 5.10 cents per share 
  • Strong balance sheet with no material debt

 

Total revenue was up 11.6% to $718.9 million and included $251.9 million of public cloud-based revenues, up 76.5%.

(Chart source: TradingView)

Total gross profit increased by 7.7% to $88.6 million, and total gross margin decreased slightly from 12.8% to 12.3% reflecting a shift in sales mix, with strong growth in Software Licensing & public cloud revenues, and a decreased in Consulting revenue. (Data Source – Company Reports)

 

Veye’s Take

Data# 3 had sustained revenue growth fuelled by digital transformation projects and cloud-based solutions. Total revenue includes $251.9M of public cloud revenues, up 76.5% on PCP. The stock has been maintaining the longer-term growth trend. Data# 3 has a strong balance sheet & cash flow. “Buy” was given to “Data# 3 Limited” at the price of $1.995 on 11 June 2019. The stock has returned more than 133% in less than nine months till now. We had analysed just a month ago that the stock had the potential to target $4.60 in the near term. It has already achieved it. The stock may fall a little bit more but it has strong support at $4.30 area which it is likely to hold. Veye maintains a "Hold" on “Data# 3 Limited” at the current price of $4.65

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