Bytes is the business

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Bytes and Datatec — giving your money a passport.

You know the narrative: the JSE is a lost cause for investors, and all great riches are made on overseas markets. Experienced investors know that this simply isn’t true, at least not all the time.

Those seeking international diversification can also find it right here on the JSE. South Africans have demonstrated an ability to take business models to the global stage. Our world-conquering efforts have generally been a failure in the retail sector, but luckily the technology sector has delivered some winners.

On longer contracts, revenue will lag billings, as the invoice may go out in advance. This can lead to significant differences in growth rates across the two measures. Alviva’s share price performance has blown Bytes away since December 2020, having more than doubled over that period. Having a different margin structure doesn’t necessarily make a company a better or worst investment — the analysis needs to be far broader than that!

The Bytes share price rallied sharply by 16.6% on the day of the announcement. Investors will be itching to get the full details in May. The Logicalis division plays in the data centre, cloud services, security and network infrastructure arenas and offers consulting services. It contributes over a third of revenue but has higher margins, so it is the most important source of profits for Datatec. Logicalis also put in a solid revenue result, up 14%.

 

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