Our opinion on the current state of ALTRON-A(AEL)Allied Electronics Corp, or Altron (AEL), is an information and communications technology company that was founded by Bill Venter in 1965. Recently, the company has been re-focusing on its core business and has sold its 80% stake in Powertech and its 100% subsidiary, Altech UEC (a developer of set-top boxes). Powertech was also sold to a BEE consortium, and Altron is in the process of selling CBI Telecom Cables.
Altron operates in six African countries, as well as the UK and Australia. The company said it had "...secured key wins in both the public and the private sector...", including the Gauteng Broadband Network phase 2 contract and FNB's data and analytics contract. Netstar won the eThekwini 3-year contract for vehicle tracking for 7,000 vehicles. Bytes, in the UK (which has now been unbundled and separately listed both in the UK and in an inward listing on the JSE), won a 5-year contract for Windows 10 from the NHS (UK).
Altron aims to restructure its debt to reduce its interest bill and has resumed paying dividends. The company acquired Phoenix Software in the UK for R698 million. On 17th December 2020, the company announced the successful listing of its subsidiary Bytes Technology on the London Stock Exchange (LSE) at a price of GBP2.70. This unlocked considerable value into the hands of Altron shareholders but resulted in a "cliff" in the Altron share price chart.
We believe that this share will continue to perform well going forward. In its results for the year to 29th February 2024, the company reported revenue up 8% and headline earnings per share (HEPS) up 36%. The company reduced debt by 44% to R313 million during the period. The company said, "Increased cash generation supported by a strong balance sheet allowed us to increase our final dividend per share by 74%."
In a trading statement for the six months to 31st August 2024, the company estimated that HEPS would rise by between 171% and 189%. The company said, "...positive momentum has continued into the 2025 financial year ("FY25"), leading to a stronger year-to-date performance in comparison to the Comparative Period, which was negatively impacted by provisions and impairments raised."
Technically, the share was moving sideways between 750c and 1330c from December 2020 until November 2023. It has since entered a new upward trend and has been rising strongly. It was added to the Winning Shares List on 15th November 2023 at 949c and has since risen to 1799c.
