Datatec, a Johannesburg Stock Exchange (JSE)-listed company, has successfully built a global business, operating across 50 countries with 11,000 employees. The company's founder and CEO, Jens Montanana, owns almost 20% of the shares, aligning investor interests with his own. This alignment is often cited as a key factor in Datatec's success. Montanana has taken investors on a remarkable journey over the past 40 years, with the company poised for continued growth.
The current focus is on the inference wave of AI, where companies are deploying AI models to end-users, requiring hybrid cloud deployments and devices. Datatec is well-positioned to benefit from this trend through its two divisions: Logicalis, which focuses on integration and management, and Westcon, a hardware and software distribution business. These distinct models benefit from the growing demand for AI technology, allowing Datatec to participate in the growth story without significant capital expenditure.
Datatec's recent financial results, for the year ended February 2026, show a 56.5% increase in headline earnings per share (Heps). The company's revenue grew by only 3.3%, but adjusted Ebitda increased by 17.8%, driven by better gross profit margins. The significant jump in Heps was largely due to reduced net finance costs. Investors are now awaiting the company's interim results, due in late October, to assess the sustainability of this growth.
The market is eagerly anticipating Datatec's next set of results, which will provide insight into the company's ability to drive improving quality of earnings. A trading statement, potentially indicating earnings growth of over 20%, may be released before the interim results. This would build on the momentum established in the previous financial year and reinforce the company's position in the AI infrastructure wave.
Datatec's presentation at the RMB Morgan Stanley Off Piste Investor Conference highlighted its strategy and growth prospects. The company is "tapping the AI infrastructure wave," focusing on the second wave of inference and edge computing. This phase involves deploying AI models to end-users, an area where Datatec's divisions can capitalize on growing demand. The conference presentation provided valuable insights into the company's approach and prospects.
Despite the share price increasing by nearly 30% in the past year, Datatec's price-earnings multiple remains relatively low at 11.4x. This may indicate that the market is skeptical about the risks to the underlying growth story or unwilling to assign a premium multiple to a technology company with a significant distribution business. The company's R19-billion market capitalization makes it an attractive, yet not obscure, investment opportunity.
As Datatec prepares to release its interim results, investors will be closely monitoring the company's progress and assessing the sustainability of its growth. The market's reaction to the results will depend on Datatec's ability to demonstrate improving quality of earnings and its potential for future growth. With its unique position in the AI infrastructure wave, Datatec is poised to continue riding the global trend, offering investors exposure to the rapidly evolving AI landscape.
Key points
- Datatec's success is attributed to its alignment of investor interests with those of its founder and CEO, Jens Montanana, who owns almost 20% of the company's shares.
- The company's two divisions, Logicalis and Westcon, benefit from growing demand for AI technology, allowing Datatec to participate in the growth story without significant capital expenditure.
- Datatec's price-earnings multiple remains relatively low at 11.4x, indicating potential for growth or skepticism about the risks to the underlying growth story.
