DTL - Data#3 Limited

[notting]

Up 10c this afternoon, on big volume. Fundie buying up? Look out above.

I was watching it doing nothing to rocketing as Howard Coleman gave it the biggest ramp I have ever seen on sky news business. On a quiet day it was most effective he and his team had already bought in!

 

[fanger]

even more puzzling, the rally comes a day after a rather subdued "Trading Update" http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01514055

Ms Marquette: la donna e mobile

View attachment 57811

I didn't think the trading update was all that bad considering where the share price was trading, so I bought some more on the news at 56 cents. Looks like its paid off already although I didn't expect a 20% pop in share price so soon.

 

[notting]

I should add that I don't think it was a cynical ramp, just a very honest true conviction type of table pounding. This thing is a bargain and "is likely to double within a year".
It seems everyone agreed.
Howard is no fool, though he did like the picks and shovels over mining companies, like FWD whoopsy and the techs are in the middle of a bit of a wreck the 2nd.
So patience, dears. Could be a bit volatile for while and management may continue to cut the dividend in the short term so no guarantee of a well paid ride.
But in the end should be OK.

 

[ftw129]

This looks like it's going to be a good "traders" stock for those confident enough to buy at support and sell at resistance but the trend for the short to medium term is bearish and volatile.

The spike that happened last week was nothing unusual for this stock. It has these kinds of spikes around about 1 or 2 times a year, both up and down. Some much larger than the one on Friday. (As can be seen in the chart below). The fact that it happened in one day is more a sign of liquidity more than anything else.



If you're not in this stock yet, DO NOT ENTER. A bounce was long overdue.

View attachment 57304

Wait for price stabilisation and a clear trend back in the right direction. You will always miss out on the first move and the most exciting gains but they are the ones that carry the highest risk, are almost impossible to time and wipe people out before they've learned the lesson that "nothing is a sure thing" in this game.

Patience.

(Of course I could be very wrong so do not take this as advice. I'm either right or wrong It is just my personal opinion based on my Technical Analysis skills. I am not qualified to give you personal advice)

 

[craft]

Data#3 expands service offering via proposed investment in WiFi Analytics company.

Aligned with current business.

Incremental and staged investment.

Funded from surplus cash flow.

http://www.asx.com.au/asxpdf/20140613/pdf/42q5yb12rzyvcn.pdf

 

[VSntchr]

Data#3 expands service offering via proposed investment in WiFi Analytics company.

Aligned with current business.

Incremental and staged investment.

Funded from surplus cash flow.

http://www.asx.com.au/asxpdf/20140613/pdf/42q5yb12rzyvcn.pdf

Funnily enough, I was just talking yesterday with a friend about how much better it feels when a company your invested in funds expansions with discretionary cash flow as opposed to debt or rattling the shareholder tin.

The biggest downside to a strategy is less of the cash flow being directed to shareholders, i.e. a reduced total return, whereas the biggest downside of the alternative sources of funding is much more capital destructive.

 

[craft]

Funnily enough, I was just talking yesterday with a friend about how much better it feels when a company your invested in funds expansions with discretionary cash flow as opposed to debt or rattling the shareholder tin.

The biggest downside to a strategy is less of the cash flow being directed to shareholders, i.e. a reduced total return, whereas the biggest downside of the alternative sources of funding is much more capital destructive.

Hi VS

It feels better - It IS better.

Less cash flow being directed to shareholders is only a problem if you could have made a better investment yourself. You want discretionary cash flows directed to wherever it can make the best return. Too early to tell if that will be the case in this instance - but its a small bet, product is currently on sold by DTL and aligned with major supplier partner Cisco and fits their technology delivery business model. DTL have been conservative with growth via accusation in the past so that also gives comfort and we are undoubtedly not in a frothy IT market.

So my initial verdict is, all good(and I wouldn't expect anything different from DTL management which is why I am a holder) to sit and watch how it plays out.

 

[VSntchr]

John Grant:
"In fact, what these new entrants (speaking of: AWS, salesforce.com, rackspace) have done is commoditise elements of what is a complex and mission critical function for enterprises and one that, to operate in an integrated way with security and integrity, demands continuing high levels of investment. Over time, there may be a higher price for customers to pay than first appears."


This AGM emphasises the long term thinking that management employs when making decisions for this company. The comments made throughout John Grant's speech highlighted this to me several times, as does the transition plan which has been organised very early on. Pretty happy to be handing the reigns to someone who already has 10 years experience in a deputy role...

Guidance about spot on to what I expected, all in all a good AGM.

 

[Ves]

I always enjoy DTL's presentations, whether they be at results time or AGMs. Feels like they put in a lot of effort to give shareholders an insight into both the business and the industry. I always feel like I've learnt something. It is a pity that most listed businesses don't put even a slither of that effort in.

Profitability guidance looks promising.... probably recovering a bit quicker than I anticipated if it's maintainable into the medium term.

 

[skc]

Profitability guidance looks promising.... probably recovering a bit quicker than I anticipated if it's maintainable into the medium term.

This followed SMX's upbeat guidance last month. I think there's something to be read there.

P.S. Looks like SMX sold down post-update thanks to MSCI deletion.

 

[VSntchr]

Pretty happy with the result today.
John and Laurence have done a good job of getting the info out to holders too; the recorded webinar is a good listen and gives some good insight into the vibe of DTL at present.

Employee expenses are up heavily this half, but as John Grant states - these are entirely revenue driving employees. Looks like the strategy of carrying costs and investing ahead of the curve continues to play out.

In order to grow profitability over the PCP despite the hefty jump in employment expenses, DTL managed to increase the gross margin to a level not seen in a H1 result for a few years.

I note that there was no discussion over Cloud Product offerings. This was something I picked up at the AGM that John mentioned. He said that the industry was finally starting to gain momentum and that the big developers were finally making globally resellable cloud offerings.

Depending on the future of the product segment, I see a few paths for DTL.
If they can continue to maintain/grow the product segment then we may see more of the same - a low margin, but highly successful business that operates on negative working capital without much need for reinvestment.

However, based on the acquisition activity and the re-shaping of the industry from capex to opex, there is a good chance that the service segment will slowly become the more relevant segment.
The valuation implications are very difficult to model as a number of factors will change; working capital will likely increase substantially from the massive negative balance we currently see (perhaps a loss of advantage here?), margins will substantially increase, revenue growth may be subdued or even in decline until the growth of services reaches scale to make the product revenue redundant, others I haven't though of?

 

[fanger]

Pretty happy with the result today.
John and Laurence have done a good job of getting the info out to holders too; the recorded webinar is a good listen and gives some good insight into the vibe of DTL at present.

Employee expenses are up heavily this half, but as John Grant states - these are entirely revenue driving employees. Looks like the strategy of carrying costs and investing ahead of the curve continues to play out.

In order to grow profitability over the PCP despite the hefty jump in employment expenses, DTL managed to increase the gross margin to a level not seen in a H1 result for a few years.

I note that there was no discussion over Cloud Product offerings. This was something I picked up at the AGM that John mentioned. He said that the industry was finally starting to gain momentum and that the big developers were finally making globally resellable cloud offerings.

Depending on the future of the product segment, I see a few paths for DTL.
If they can continue to maintain/grow the product segment then we may see more of the same - a low margin, but highly successful business that operates on negative working capital without much need for reinvestment.

However, based on the acquisition activity and the re-shaping of the industry from capex to opex, there is a good chance that the service segment will slowly become the more relevant segment.
The valuation implications are very difficult to model as a number of factors will change; working capital will likely increase substantially from the massive negative balance we currently see (perhaps a loss of advantage here?), margins will substantially increase, revenue growth may be subdued or even in decline until the growth of services reaches scale to make the product revenue redundant, others I haven't though of?

I haven't seen the results yet but I did see it trade on the open and thought the worst. Will have a read through them tonight.

 

[Huskar]

Pretty happy with the result today.
John and Laurence have done a good job of getting the info out to holders too; the recorded webinar is a good listen and gives some good insight into the vibe of DTL at present.

Employee expenses are up heavily this half, but as John Grant states - these are entirely revenue driving employees. Looks like the strategy of carrying costs and investing ahead of the curve continues to play out.

In order to grow profitability over the PCP despite the hefty jump in employment expenses, DTL managed to increase the gross margin to a level not seen in a H1 result for a few years.

I note that there was no discussion over Cloud Product offerings. This was something I picked up at the AGM that John mentioned. He said that the industry was finally starting to gain momentum and that the big developers were finally making globally resellable cloud offerings.

Depending on the future of the product segment, I see a few paths for DTL.
If they can continue to maintain/grow the product segment then we may see more of the same - a low margin, but highly successful business that operates on negative working capital without much need for reinvestment.

However, based on the acquisition activity and the re-shaping of the industry from capex to opex, there is a good chance that the service segment will slowly become the more relevant segment.
The valuation implications are very difficult to model as a number of factors will change; working capital will likely increase substantially from the massive negative balance we currently see (perhaps a loss of advantage here?), margins will substantially increase, revenue growth may be subdued or even in decline until the growth of services reaches scale to make the product revenue redundant, others I haven't though of?

Interesting analysis thanks VS
I saw they purchased a Wi-Fi analytics company - this is the real hot space (by which I mean data analytics more generally) in the US at the moment and I think has a lot of potential for their services business. Product segment may deteriorate much faster than envisioned if cloud providers simply cut out the middleman, especially given increasing market clout of AWS

 

[ukulele]

I'm long on DTL basically for the yield play. There have been a couple of bullish bars recently but the past few days the volume has dried up, I think everyone is waiting for the dividend next week. It'll be interesting what it does after it goes ex div.

 

[ukulele]

DTL has finally closed above 80cents on BIG volume after trying for the past week. I'm interested to see what others think technically on this stock at the moment.

Today's candle does look bullish however the volume might actually be too high, showing background sellers are giving supply.

 

[ftw129]

The spike that happened last week was nothing unusual for this stock. It has these kinds of spikes around about 1 or 2 times a year, both up and down. Some much larger than the one on Friday. (As can be seen in the chart below). The fact that it happened in one day is more a sign of liquidity more than anything else.

View attachment 57849

If you're not in this stock yet, DO NOT ENTER. A bounce was long overdue.

View attachment 57304

Wait for price stabilisation and a clear trend back in the right direction. You will always miss out on the first move and the most exciting gains but they are the ones that carry the highest risk, are almost impossible to time and wipe people out before they've learned the lesson that "nothing is a sure thing" in this game.

Patience.

(Of course I could be very wrong so do not take this as advice. I'm either right or wrong It is just my personal opinion based on my Technical Analysis skills. I am not qualified to give you personal advice)

Price (most likely) to fluctuate between .50c and .90c in the short to medium term.

Hi ukelele,

I agree that the breaking through the .80c mark is a good sign but the real area of concern is still the .90c region. Should it break through there, then you can expect this 0.90c region to become an area of significant support for future price fluctuations and a positive sign for the stock price but even then, this stock looks like it will just channel between various areas of support and resistance. The trend that started back in 2001, is highly unlikely to continue in the short or even medium term.

I have just pasted the screen shot (below) of the exact same chart with the exact same comments I made a year ago as they are still relevant. (Albeit, with a few more weekly price bars now)



This stock looks like it has become a good "traders" stock who will buy around support levels and sell at levels of resistance. Very easy to see where they are with a simple chart. A lot more money to be made then just buying and praying

(All diagrams and opinions are here purely for illustration purposes only. You should not act on any of this information and seek your own advice)

 

[ftw129]

(Ps... I'm not sure why the two charts are repeated at the bottom of my post (above). I can't seem to edit them out for some reason so please excuse the repitition)

 

[craft]

Noticed DTL is having a good day on an earnings announcement. Superficially it looks like the early indications of earnings turn are following through - haven't had a good look yet though. Any thoughts.

 

[craft]

Had a little more of a look and put the figure into context for myself.

HALF yearly NPAT. Last bar is the mid range from the announcement.



Earnings decline trend has now given way to 2nd strong PCP result. 2nd highest ever second half result.

 

[VSntchr]

I like it craft
Bit more invested capital this half given the Business Aspect acquisition along with the Wifi Analytics investment, but the result is heading in the right direction. Those dark clouds don't look as scary anymore.