IT systems supplier Data #3 is a reliable investment with high yield

DTL has built a strong reputation and competitive advantage by focusing its broad and deep ICT (Information and Communication Technology) expertise on productivity applications, providing infrastructure and people support to match the increasingly specific requirements of clients.

It has built a leading position with a deep private and public sector client base and consistently wins awards from key partners—eg: Gold Certified Partner of both Microsoft and Cisco, HP Premium Partner, IBM Premium Solutions partner.

Revenues have tripled over five years with some 25% compound annual growth of dividends. DTL is the largest player in its chosen field. It has no debt. Capital needs are low. Its reputation and nationwide capabilities support its continuing growth.

It could be said that Data #3 is to the large private or public sector computer-user as Woolworths is to the householder: While other ICT specialists may get more kudos and fill key niche roles, DTL supplies a major share of the software and hardware for most new projects and normal housekeeping.

We enjoy its reliability and yield, and can't complain about the ongoing growth either!

Half-year Performance & Estimates - DTL

Year-end June	1H12A	FY12A	1H13A	FY13A	1H14A	FY14E	FY15E
Sales, $m	435.9	809.5	405.3	769.9	399.1	745.0	732.0
EBITDA, $m	11.0	19.5	10.9	20.2	5.0	11.7	14.1
EBIT, $m	10.6	18.4	10.0	16.7	3.8	9.1	11.1
Report NPAT, $m	7.2	13.7	6.9	12.2	2.6
Adj. NPAT, $m					2.6	6.5	8.5
Reported EPS, ¢	5.00	9.00	4.00	8.00	2.00
Adjusted EPS, ¢					2.00	4.60	5.60
EPS %FY/Growth	56%		50%	-11%	-50%	-43%	22%
Dividend, ¢	3.45	7.0	3.45	7.0	1.5	4.00	4.90
Franking, %	100%	100%	100%	100%	100%	100%	100%
EBITDA Margin	0	2%	3%	3%	1%	1.6%	1.9%
NPAT Margin	0	2%	2%	2%	1%	0.9%	1.2%
ROE, %	0	42%	20%	36%	8%
EBIT/Interest	0.0	-12.8	61.3	-20.6	45.96
Net Debt / Equity	0	-2.1	-0.04	-2.46	-0.16
CashFlow/Sh, ¢	-24.2	18.8	-38.3	19.8	-46.9	10.5	7.5
Y/E Shares, m	154.0	154.0	154.0	154.0	154.0

Notes

Data sourced from IRESS Market Technology Limited. EPS Growth compared with the pcp is shown in most columns except the first half years which show their percentage of full year EPS. In a handful of cases, unadjusted share splits, or changes between positive and negative values, may give strange changes in ratios.

Recent News Highlights

As at 31/12/2012 : see details at www.data3.com.au   (new window? Shift+Click)

08/11/2012     AGM 2012

31/10/2012     Wins Tender for Fiona Stanley Hospital, Perth

27/09/2012     Annual Report 2012

24/08/2012     FY12 Results - Profit & Dividends Ahead of Long Term Trend

23/07/2012     Full Year Profit Guidance Update

15/06/2012     Expects FY12 $18.5-19.5m pre-tax profit, in line with trend despite major IT project delays

10/04/2012     2012 VMware Cloud Infrastructure Partner of the Year; Recognised as HP`s largest partner in ANZ; Wins Smarter Planet Award at IBM Business Partner Summit

15/03/2012     Wins Federal Government Microsoft Licensing contract

20/02/2012     Grows 1H revenue and delivers profit ahead of trend

03/02/2012      Strategic partnership with EM Corporation on cloud computing & data handling

25/01/2012     DTL projecting 1H revenue growth with profit ahead of trend

08/11/2011      Annual General Meeting; Appoints former IBM MD as Non-Executive Director

Russell Research in the media

Stock Picks for The Bull.com.au -  17 December 2012

HOLD Data #3, DTL ($1.23)

Data #3 is a very consistent and established performer. It licenses software and hardware for the public and private sectors. It’s a lead supplier for Microsoft, Cisco, and Hewlett Packard. It’s well placed to continue growth. It’s trading on an undemanding price/earnings ratio of about 12 times and offers a franked yield of almost 6.5 per cent.

Stock Picks for Sunday Herald Sun – 2 September 2012

HOLD Data #3 Limited, DTL, $1.15

Accumulate this leading and rock-solid provider of essential ICT services for its 6% franked yield and reliable growth.

Company Overview

Data#3 Limited (DTL) is a national Information and Communication Technology (ICT) solutions company, begun 35 years ago and listed in 1997. It integrates software licensing and software asset management with design, procurement and support of infrastructure, for clients’ desktop, network & data centre hardware and software.

Major global vendors Microsoft, Cisco, HP, IBM, VMware, Citrix, Symantec, Adobe and others use DTL to provide Integrated Solutions to their purchasers.

DTL customises Product Solutions for cost-effective technology procurement, supply and roll-out. Its Managed Services and People Solutions outsource infrastructure maintenance, support and operations, while providing people and performance management to optimize customers’ return on resources.

DTL has a customer oriented culture. Clients cover banking and finance, mining, tourism and leisure, legal, healthcare, manufacturing, distribution and utilities. DTL has a very strong position in the government and public sector both at Federal and many State and local levels, and, based in Brisbane, has operations across Australia.

At the 8th November AGM, MD John Grant confirmed that based on preliminary October numbers and forecasts to December, DTL was expecting relatively strong growth in revenues indicative of its continuing ability to win market share. However, he noted that uncertainty created by global and local issues was causing some customers to defer capital expenditure for hardware product and others to delay strategic transformational decisions and their associated IT projects.

“At current course and speed, it is probable that with the foreshadowed higher levels of investment, profit for the first half of FY12 will not vary materially from the exceptionally strong FY11 first half result. On balance, we see this as a very good outcome and ahead of the long run trend of recent years,” he said.

Data#3’s shares were split on a 10 for 1 basis effective from 16 November 2011 as approved at the AGM.