[OTC BB: DKKBF] Datacraft Asia sees 35pc growth amid slowdown
Saturday, August 18, 2001
LYDIA ZAJC
Networking and e-business services firm Datacraft Asia has cautiously forecast earnings growth of 30 per cent to 35 per cent this financial year along with a rise in its Hong Kong sales - despite a worldwide slump for technology firms.
"Given the mix of opportunities and risk we believe we can grow earnings by 30 per cent to 35 per cent in the current year," said chief executive Ron Cattell yesterday, a day after the firm unveiled its annual results.
"We are expecting definite positive growth in Hong Kong," he said.
The Singapore-listed company reported a rise in profit for the year to June 30 to US$44.2 million after tax and minorities, or 9.7 US cents a share. That is 40 per cent higher than the previous year's US$31.5 million, or 7.3 US cents a share.
Revenues increased to US$567.3 million, up 36 per cent from the previous year's US$417.7 million. The company, a unit of technology group Dimension Data of South Africa, links networks and offers services in about a dozen Asia-Pacific countries.
Mr Cattell said Datacraft executives could not predict how long the global downturn for the technology industry would last, nor how severely it would affect Asia. "Clearly we have to be very cautious about the market situation," he said. "Do I have a better crystal ball than anyone else's? I don't think so."
Regional technology analyst David Toh at ING Barings Securities in Singapore said even if Datacraft did not exactly match its predictions for the year to June 30 next year company watchers would give the firm a little leeway. "Because the company has built up a lot of credit over the last few years, the market's willing to give it the benefit of the doubt."
Datacraft also made its targets for the year - when many other tech companies had failed.
"In these very challenging market conditions, we achieved 40 per cent profit growth," Mr Cattell said. "You compare that with pretty much any other information technology player in the world," he added.
"We are very pleased we were able to keep the forecast at the beginning of the year."
Technology analysts and firms worldwide are scratching their heads over the durability of the slowdown, which has hurt many former stock market darlings.
Even the largest technology companies have been forced to fire staff and backtrack on earlier predictions while their shares plummet. Some smaller ones have simply closed.
Datacraft attributed its positive outlook partly to its strict focus on Asia, which had evaded much of the tech gloom.
"Asia's certainly not immune and there is a slowdown," Mr Cattell said. "But the slowdown is very small compared with the US and Europe."
Mr Toh added that the firm was benefitting from the opening up of telecommunications industries in many Asian nations to greater competition.
New players were scrambling to invest in networking infrastructure, while older rivals were increasing capital expenditure to keep up.
The company, which unveiled US$62 million in recent contracts, would selectively continue to acquire new firms. However, the rate of takeovers would slow as there were fewer profitable and growing concerns, Mr Cattell said.
Datacraft would potentially look at making buys in China, which was a growing market, and at firms with high services content. Services produced the company's highest profit margins.
On Friday, shares of Datacraft rose 10 Singapore cents to close at S$3.80
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Published in the South China Morning Post. Copyright © 2001. All rights reserved.
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