DTL: Solid IT company

[tommy]

Solid results out!

Also check out good analysis by Intersuisse:
http://www.intersuisse.com.au/files/...uly%202007.pdf


Data#3 confirms yet another record full year result

BRISBANE, Wednesday 25th July 2007. Data#3 Limited (ASX: DTL), an information and communication technology solutions company, today announced that results for the 2007 financial year were anticipated to be ahead of general market expectations.

- Total revenue for FY2007 expected to exceed $280M
- EBIT of approximately $9.9M forecast for FY2007, up 27% on previous year
- Another record full-year result for the company
- Intention to extend on-market share buy-back for 12 months

Subject to year-end audit, revenues in excess of $280M and EBIT of approximately $9.9M are predicted for the year ended 30th June 2007. This constitutes another record full year result for the company.

Revenues for the 2006 financial year were $239.6M, and EBIT was $7.8M, while revenues for the first half of 2007 were $135.8M, and EBIT was $4.1M.

Managing Director John Grant said the second half performance had more than met expectations.

�gIn a market which remains strong but competitive and in which there is considerable pressure on costs this result is exceptional and testimony to the investments we have made in developing market-leading expertise, the strong relationships we have maintained with our
customers and suppliers, and the commitment of our people,�h Mr Grant said. The Board intends to announce the audited full year results and the final dividend on 22nd August 2007.

Intention to extend on-market share buy-back
The Board also announced its intention to extend the on-market buy-back (of up to 10% of the company�fs ordinary shares) for a further 12 month period, commencing 1st September 2007.

The on-market buy-back was introduced on 1st September 2006. To-date 44,115 shares have been purchased under the on-market buy-back, and have been cancelled.

�gWe are satisfied that the buy-back has helped achieve the objective of delivering improved shareholder return on a sustainable basis and reducing volatility in the company�fs share price and the decision to extend it will maintain this position,�h said Chairman, Richard Anderson.

�gWe also intend to maintain our established dividend payment practice.�h

About Data#3
Data#3 Limited (ASX: DTL) is a significant national Information and Communication Technology (ICT) solutions company.
Customers utilise Data#3�fs expertise to deliver exceptional value in:
- Software licensing and software asset management
- Application and infrastructure integration, and support through outsourcing and remote
management
- Product sourcing and related integration services
- Optimisation of data centre infrastructure
- Contract and permanent recruitment.

Data#3�fs customers cover a wide range of industries including banking and finance, mining, tourism and leisure, legal, healthcare, manufacturing, distribution, government and utilities and are located throughout Australia and Asia Pacific.

Data#3 reported revenues of $240 million in 2005/06 and has over 350 employees. The company is headquartered in Brisbane, and it has offices located in Sydney, Melbourne, Canberra, Townsville, Rockhampton, Gladstone and New Caledonia.

More information about the company, its products and services is available at http://www.data3.com.au

[tommy]

Forgot to add this:

Market cap: 93 million
PE: 16 vs sector average of 22

Once it hits 100 million market cap, more instos should pick this stock up in their radar. Compared to the PE of ASZ and UXC, this stock is very undervalued!

[Lizard]

Thanks Tommy. I seem to stumble over this one every now and then in my market screening, but never quite comes out as a Buy. Time for yet another look.

[tommy]

quote:Originally posted by Lizard

Thanks Tommy. I seem to stumble over this one every now and then in my market screening, but never quite comes out as a Buy. Time for yet another look.

Hi Liz,

Glad to hear you are interested in this one too, not a good trading stock but a typical "buy and forget" stock. Buyback should put some upward pressure too, not to mention the dividends that instos like. Not a super sexy stock but a solid performer in the IT sector.

[OneUp]

I rode this one from $1 to near zero in the tech bust then up to $4 - sold out a few years ago.

My main issue with DTL (and this space) is the margins. They're so slim. Any hiccup and profit disappears, so one to watch closely IMO rather than set and forget like say TRS.

[tommy]

quote:Originally posted by OneUp

I rode this one from $1 to near zero in the tech bust then up to $4 - sold out a few years ago.

My main issue with DTL (and this space) is the margins. They're so slim. Any hiccup and profit disappears, so one to watch closely IMO rather than set and forget like say TRS.

Well done Oneup for the 4 bagger[:I]

So you don't like ICT service companies at all due to their margins?

Got to disagree with you there, I personally think the "any hiccup" scenario really applies more to smaller companies that rely more on lumpy contracts and limited number of clients: the likes of ASZ, DTL and UXC seem to be more reliable due to the recurring revenue stream from a wide range of clients and their ability to win bigger contracts as they grow in size which naturally have a bigger margin.

From my perspective DTL management have been very consistent in their performance over the past few years and thus a forward PE ratio rather than one based on past performance should be warranted by the market.

Anyway, I appreciate your opinion as always, keep up da good work because you always seem to see things from an alternative angle and enjoy reading your posts mate[:I]

As for TRS, yeah, still banging my head on the computer screen for selling out those cheapo $2 stocks.... I am looking for the "next" TRS but at this point, haven't found such a multibagger yet, though hoping that RFG might do the trick (though there's a long way to go...)

[thereslifeafter87]

I agree with Oneup.

The first thing I noticed when reading through the announcements posted above were the very slim EBIT margins.

It wouldn't take much to wipe 50% off the market cap of the company.

[tommy]

quote:Originally posted by thereslifeafter87

I agree with Oneup.

The first thing I noticed when reading through the announcements posted above were the very slim EBIT margins.

It wouldn't take much to wipe 50% off the market cap of the company.

Hi TLA87,

Errr, very good points you raised about the rather thin operating margin compared to other firms.

Perhaps that is why they have a lower PE ratio than its peers?

But still, they have managed to consistently grow, pay increasing dividends, and have zero debt, so take that into account, current PE of 15 seems low.

As for "50% of market cap being wiped off easily", oh well, a re-rating should occur before such an event and in any case stop-loss should save my butt and lock in profits[}] Risk/reward ratio seems okay at the current price level.

[tommy]

DTL rerating has begun, going against the gravity of the volatile sharemarket

http://bigcharts.marketwatch.com/int...w.x=0&draw.y=0

Easy money

[Lizard]

Is this the only DTL thread? Pretty sure you're still on it KW? Looks to have been a good long term stock.

I just dug it out for a look and got value to $9.30 - currently trading at $8.50 but very illiquid. Looks similar to DWS? Perhaps with more federal govt contracts.

Margins seem on the tight side, but I guess that is what comes with high ROIC - competition.