DatacrftUS$   

Beneficiary of weak US$

Published March 28, 2008

DataCraft divides client base to conquer growing pains

Andrew Penrice Tyrie has had success with data centres and network management, but he needs to make sure customers understand how the technology is relevant to them

DataCraft?s activities in the information technology field are driven by a simple theme. ?If you do a good job building your basic infrastructure, everything you run on top of it is a lot easier to manage,? says Andrew Penrice Tyrie, DataCraft?s solutions head for financial services and insurance. The company, an independent services and solutions provider, focuses on networking, security, converged communications, data centre storage, Microsoft operating environments and contact centre technologies. Its services include consulting, integration, training and managed services. Given its philosophy of getting basic infrastructure right before worrying about other technical issues, it isn?t surprising that many of DataCraft?s wins in the financial services industry involve building networks, especially IP-based ones. ?IP networks are our heritage; we?ve been building them for twenty years,? says Penrice Tyrie. DataCraft?s major achievement in this area is its project with The State Bank of India in 2005. The bank embarked on an enterprise-wide IT project, SBI Connect, to integrate its service channels and enhance its efficiency by building a nationwide converged IP network. DataCraft designed, implemented and maintains the solution that fulfills SBI?s requirements. Deployed over three years, it involved building a multi-service IP infrastructure covering more than 8,000 locations nationwide and the deployment of over 11,200 IP phones. As part of the solution DataCraft developed XML-based applications, accessible from multi-function IP phones, that layered billing functions, email integration and enterprise-wide LDAP-base directory support on top of the basic IP telephony service. A more recent example is the contract DataCraft won to design and deploy network infrastructure and security solutions for a global retail bank that recently set up its operations in India. DataCraft designed and built an IP-based Wide Area Network that provided high-speed connectivity between offices in New Delhi, Mumbai and the bank?s headquarters in London. The network supported core banking, office applications and streaming media on top of basic telephony. Within the past year, DataCraft made a major change to its go-to-market strategy when it decided to divide its client base into five verticals, one of which is the financial services industry, and manage each separately. The objective is to allow DataCraft, which saw a 15 percent compound annual revenue growth rate between 2003-07, to continue to grow while maintaining the responsiveness of a small company. ?We have senior technical and business managers sitting on the same floor, close to each other. That?s why we can respond quickly to any request for a proposal,? says Penrice Tyrie. The deeper challenge, for which defining market verticals is only part of the answer, is convincing customers that DataCraft?s technical capabilities have a direct bearing on their business problems. DataCraft?s technical credentials are strong, but growing pains similar to the ones it is currently experiencing have afflicted companies in all industries regardless of their technical capabilities. ?They know that we understand data centres, storage, network management and the like but they really want us to tell them more about how all of this applies to their business,? says Penrice Tyrie. - By Batara Siagian

 

Datacraft, Southeast Asia's largest computer data network builder, said on 7/3 its order book was robust in the current quarter, and that it was in acquisition talks with a handful of Asian firms.

"This quarter the bookings seem to be pretty robust. Looking at all the headlines, concerned about client slowing down spending -- there has been no evidence of that so far," CEO Bill Padfield told Reuters in an interview.

"We have a number of deals in the pipeline. We are in active talks with a handful of different companies all in Asia. If things go well, we will continue to acquire through out the year," he said.

 

Release: Datacraft kick-starts FY2007 with 47% increase in Q1 profits and strong growth in services business

Hoorayy... Finally it touched US$1.3 ... Still going up....

 

Cash rich doing share buy back. Giving divident of I think 4.75 US cents. Analyst target US 1.28. With US dollar at 1.55 worth taking a look.

 

It has secured a one-year deal worth US$3.4 mln from a leading wireless service provider in the Philippines. Under the contract, Datacraft will re-engineer and support the distribution and core network elements that underpin the service provider's high-speed wireless broadband internet service, it said.

 

It is a fundamental turnaround story, and Citigroup believe the stock deserves to be re-rated, particularly in view of its earnings quality - evident from the sharp decline in receivable days and gross margin improvement over the past few years. Despite being loss-,aking in FY03. mgt didn't compromise on these attributes (and managed to improve these metrics) as it executed its turnaround strategy.



As China's banking industry liberalizes, foeign banks are investing in infrastructure as part of their plans to scale up. Citigroup believe Datacraft is well positioned to benefit since it already has an established relationship with several foreign banks in Asia. Unlike the majority of local enterprise customers, banks' margins and receivable days are likely to be more attractive and help return operations to profitability.



The impending adoption of Unified Communication (UC) could be a key earnings driver. UC promotes communications mobility and allows data/voice interaction between devices like PC, cell phones and fax machines. UC enables cost savings and improves work efficiencies. For Datacraft, UC is a high-margin solution offering and is likely to turn mainstream in 2008.



Citigroup's channel checks suggest the operating environment and bookings remain strong, andthey see little downside risk to their forecasts. Valuations appear attracive with FCF yield of c. 5%, dividend yield of 3%, and P/CEPS near a 7-year low.

 

Explosive price change going to happen soon - bollinger bands very tight.

Likely price movement could be downwards - the RSI and Acc/Dist downtrending.

 

It price tp look within it reach, however coming days it sti market and things r not very rosy, mkt seem to be getting unexcited and tried with volume getting less and less. Trade with care if need be.

 

Macquarie says it has a target price of $1.28 because it is bullish about the firm's growth prospects.



"We have upgraded our year to Sep 07 earnings forecast by 40% on account of improved margins, as Datacraft scales up its revenue base and taps on higher complexity, higher-margin opportunities relating to new Internet-related technology that would allow the roll-out of new products and services," Macquarie said in a note to clients.



The research firm expects Datacraft's net profit to grow to US$26.7m in this financial year from US$12.2m in the year to last September, then to US$28.3m in the year to next Sep and US$33.8m in the year to Sep 08.



Macquarie expects the company will start paying dividends for the year to next Sep in view of its growth opportunities and cash-rich balance sheet.



"We expect greater growth opportunities in the coming years to drive investors to look at Datacraft under a growth framework," it said.

 

Thk Nostrademus, D.Craft is in deed reported a much awaited better result, but the next round may have to watch it forex exchange gain co's US$ is gaining some ground and China is not going to up it Yuen so suddenly, it is using other mean to off load it pressure by USA.

 

In 3Q06, it made a forex gain for US$0.32m vs loss US$0.173m a year ago.

 

Southeast Asia's biggest computer data network builder, posted an
85% jump in quarterly net profit, helped by robust spending by its bank and technology clients. It said it was optimistic about its 4Q performance, given its strong order backlog of $142 million at end-June, up $15 million from the previous quarter. But it did flag a possible decrease in gross profit margins the next quarter.



"This is our highest backlog in 15 quarters and makes us feel confident we will see improvement in Q4 for our top line (from Q3)," Chief Executive Bill Padfield told a briefing. But as its order backlog includes more hardware business, gross margins in the fourth quarter could fall, he said. "The 19.5% we saw in Q3 may be a little bit of a challenge for Q4, depending on the product mix."



Net profit in its fiscal third quarter ended June was US$5.33 million, versus a year-earlier restated $2.87 million. "Our strong Q3 earnings reflect the continued trend of healthy margin expansion and a falling tax rate," Padfield added. Gross margins climbed to 19.5%, a 2.4% rise over the same quarter last year, and the highest level in 15 quarters, he added.



Net profit for the year to September 2006 is expected to nearly double to $22.6 million, according to a poll of seven analysts by Reuters Estimates.

 

Trading in Yuen knowing yuen is strengthing against US$, so is Yen when convert to US$ term, it mean in US$ term it come up with a figure of US$127mil, so it should report a much better figure if it goes down again. (Quote in US$ term but used Yuen to trade) Thus, it transform into gain on export on a weak US$, and vice verse. 

 

zhuge_liang - Thank you for the enligtenment.

 

Hi Matthew8. I think with its forecast of slowing sales growth in the second half, its price could trend down in the near term.

 

Sorry, don't know why my earlier posting was so long.  This is my what I want to post.

zhuge_liang - It's always interesting to read you postings. Your write-up on Datacraft gives the impression that the company is doing well going forward. You mentioned that Citigroup has a price target of US$1.45. Do you believe that this target can be reached? If so, how long - 6 months, 1 year or 2 years?

At the moment, this bus is travelling at 100 mph. Is it safe to board the bus since it can speed up to 145 mph? Would like to hear your advice.

Nostradamus said its third quarter results will be released on August 2nd. Do you think this result will be better than the second quarter results which confirmed a 'slowing sales growth'?

Looking forward to hear from you. Thanks.

Nostradamus said its third quarter results will be released on August 2nd. Do you think this result will be better than the second quarter results which confirmed a 'slowing sales growth'?

Looking forward to hear from you. Thanks.

 

Hi Z'Liang,  If that's the case, then a weak USD will benefit D'Craft.

Hmmmm....... You did mention a net cash surplus of USD127m  which when translated to Sing$ would be an exchange loss isn't it so? Rgds.

 

zhuge_liang - It's always interesting to read you postings. Your write-up on Datacraft gives the impression that the company is doing well going forward. You mentioned that Citigroup has a price target of US$1.45. Do you believe that this target can be reached? If so, how long - 6 months, 1 year or 2 years?

At the moment, this bus is travelling at 100 mph. Is it safe to board the bus since it can speed up to 145 mph? Would like to hear your advice.

Nostradamus said its third quarter results will be released on August 2nd. Do you think this result will be better than the second quarter results which confirmed a 'slowing sales growth'? said its third quarter results will be released on August 2nd. Do you think this result will be better than the second quarter results which confirmed a 'slowing sales growth'?

Looking forward to hear from you. Thanks.- It's always interesting to read you postings. Your write-up on Datacraft gives the impression that the company is doing well going forward. You mentioned that Citigroup has a price target of US$1.45. Do you believe that this target can be reached? If so, how long - 6 months, 1 year or 2 years?

At the moment, this bus is travelling at 100 mph. Is it safe to board the bus since it can speed up to 145 mph? Would like to hear your advice.

Nostradamus said its third quarter results will be released on August 2nd. Do you think this result will be better than the second quarter results which confirmed a 'slowing sales growth'? said its third quarter results will be released on August 2nd. Do you think this result will be better than the second quarter results which confirmed a 'slowing sales growth'?

Looking forward to hear from you. Thanks.

 

Hi ten4one. If 'm not wrong, Datacraft's earnings are in local Asian currencies. If the Asian currencies strengthen, when converted to US$, the amount will be larger.

 

It transform into gain on export on weak US$, thus compensated when more good flow into USA and into China when Yuen appreciated.