Our opinion on the current state of BYTES(BYI)Bytes Technology, spun out of Altron, was separately listed on the London Stock Exchange (LSE) and the JSE. At the time of listing, it had a market capitalisation of around R13 billion, which has since grown to R26.5 billion. Altron shareholders benefited from the demerger, receiving GBP542 million in shares and cash, marking a significant release of value. Bytes Technology describes itself as "one of the UK's leading software, security, and cloud services specialists." It is also the largest reseller of Microsoft products in the UK, with approximately 60% of its revenue generated from annuity-based income.
In its results for the six months to 31st August 2024, the company reported a 2.9% decline in revenue but a 19.5% increase in headline earnings per share (HEPS). The company attributed the strong increase in operating profit to continued demand for its broad range of software, solutions, and services.
Technically, the share rose to a cycle high of 16,100c on 25th January 2024, and there are expectations that it will exceed this high in the near future. The current downward trend is likely due to the relative strength of the rand this year. However, Bytes Technology remains a solid rand-hedge and is expected to perform well going forward.
On 21st February 2024, the company announced the resignation of its CEO, Neil Murphy, with immediate effect, and he was replaced by Sam Mudd. Despite this leadership change, the company is positioned to maintain its strong performance in the market.