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Data# 3 Limited, pipeline of opportunities

Team Veye | 23 Feb 2021 ASX - DTL
Data# 3 Limited, pipeline of opportunities

Data# 3 Limited (ASX: DTL)

Australian business technology solutions leader Data# 3 Limited (ASX: DTL) on 18 February 2021 announced its results for the six months ended 31 December 2020 (1H FY21). These results saw the company deliver sustained earnings growth, consistent with its long-term strategy.

1H FY21 – growth across all key metrics:

  • Total revenue up 19.2% to $856.7 million, including $346.1 million of public cloud revenues
  • NPBT up 10.2% to $13.9 million
  • NPAT (excluding minority interests) up 7.9% to $9.4 million
  • EPS up 7.9% to 6.09 cents per share
  • Interim fully franked dividend up 7.8% to 5.5 cents per share
  • A strong balance sheet with no debt

(Chart source: TradingView)

Total gross profit increased by 1.2% to $89.7 million, and total gross margin decreased from 12.3% to 10.5% reflecting a shift in sales mix, with very strong growth in Software Licensing & public cloud revenues.

Staff costs increased by 2.5% to $66.7 million, solely reflecting headcount growth. Operating expenses decreased by 18.4% to $9.7 million, with a large reduction in travel costs as a result of the pandemic, rent savings from the decommissioning of the Data# 3 Cloud platform and a concerted effort to contain costs generally. (Data Source – Company Reports)

 

Veye’s Take

Data#3 continues to see growth in the Australian IT market and believes that it was well positioned to capitalise on that opportunity as it continues to develop and offer solutions for its customers’ changing requirements. The stock is under selling pressure since October 2020. The formation of candles at the upper band of the Bollinger with wicks rejecting the further upside momentum indicates continued selling. The bearish trend is well supported by negative divergence on RSI and MACD entering in negative territory. The bearish trend is further supported by the formation of "Bearish engulfing "on weekly charts. It is also completing a head & shoulder formation which is bearish. The stock is expected to take support near $4.37. The formation of any reversal candle at this point could signal a "Buying opportunity. At the current juncture, with heavy selling pressure, the stock is expected to continue with a downward trend. Veye recommends a “Sell" on “Data#3 Limited” at the current price of $5.46

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