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Company Profile DTM Information Technology Group Inc. provides and integrates computer products and professional services. The Company provides consulting, installation, and support services as well as networking, office automation, and telecommunications network installation. DTM also serves as a reseller of major brand products. [from bloomberg] DTM Industry accreditations Microsoft Certified Solution Provider - Partner Level Novell Authorized Platinum Partner & Reseller Lotus Business Partner / Integrator / Developper Citrix Gold Solutions Provider Citrix Education Provider Reseller E-work Business Partner Omtools Authorized Silver Partner Hewlett-Packard's General Certification IBM Value Added Reseller IBM Service Center (Thinkpad) Compaq Authorized Reseller Compaq Public Sector Partner Compaq Service Center Toshiba Performance Dealer DTM partners Comments Basically they're a consulting firm specializing in eBusiness solutions. The extreme undervalued-ness... if there is such a word ;-) is probably due to the fact the company traded on the MSE and was "unknown". With companies like Multiactive Software, Speedware, Microforum, Cyberplex and even Envoy Communications doing so well, this sector of eBusiness/eConsulting/eCommerce/eSolutions stocks are hot and will continue to be hot going into year 2000. Technically, the chart also looks ready. All it needs is some more volume and activity, which I believe the shift from Montreal to Toronto will help. Recent Developments and News [click here] DTM 1999-12-02 (Canadian Corporate News.) DTM's Strategy Yields Benefits: The Company Achieves a First-Quarter Profit MONTREAL, QUEBEC--Management of DTM Information Technology Group Inc. is proud to announce that the Company's shift to consulting services has started to produce the expected results. In fact, revenues from services rose more than 70 %, despite the temporarily difficult context arising from the technological moratorium caused by the year 2000 changeover. Therefore, the Company posted a 13.4 % increase in sales, which rose from $11.1 million for the first quarter of the previous year to $12.6 million for the quarter ended October 31, 1999. Over the past year, management improved the Company's cost structure, outsourced its computer hardware distribution warehousing and logistics, and added over 50 consultants to its consulting team. "We made considerable progress in 1999 with regard to the implementation of our strategy," noted Karol Brassard, Chairman of the Board and Chief Executive Officer of DTM. "We are on the right track: our revenues from consulting services are growing rapidly and we have turned a profit in the first quarter. However, it is as of the second half of fiscal 2000 that our efforts will yield their full benefits since the Y2K issue prompts companies to defer their information technology spending." The Company recorded earnings before interest, income taxes, depreciation and amortization (EBITDA) of $199,000 for the first quarter of 1999, compared with a loss of $354,000 last year. DTM posted net earnings of $41,000 or $0.01 per share for the quarter ended October 31, 1999, as opposed to a net loss of $266,000 or $0.08 per share for the first quarter of the previous year. "We are well positioned to increase our revenues from services. Our team of about 110 consultants offers integrated e-business solutions, focusing in particular on GroupWare tools, Customer Relationship Management (CRM) and e-commerce solutions - three services for which demand will grow as of the second half of fiscal 1999-2000 when companies, after the year 2000 changeover, will seek once again to improve their efficiency through e-business solutions," concluded Mr. Brassard. Involved in computers since 1977, DTM Information Technology Group Inc. is a consulting and systems integration company active in the information technology (IT) sector. The Company specializes in integrated e-business solutions, more specifically the supply and integration of network infrastructures as well as the development of GroupWare and e-commerce tools. Established in Montreal, Quebec City and Toronto, DTM has more than 160 employees. [click here] DTM 1999-10-28 (Canadian Corporate News.) DTM Strengthens its e-commerce Expertise-The Company Joins IBM's Web Integrator Initiative MONTREAL, QUEBEC--Management of DTM Information Technology Group is proud to announce that the Company has joined IBM's Web Integrator Initiative. The Web Integrator Premier Partner certification obtained by DTM is the highest distinction granted by IBM to a consulting firm in the development of Internet and e-commerce business solutions. "With its solid reputation, expertise in e-business solutions and in-depth knowledge of IBM and Lotus products, we are absolutely pleased that DTM has joined our Web Integrator Initiative," said Mark Hanny, Vice President of IBM's Web Integrator Initiative. Joining the Initiative will enable DTM to strengthen its e-commerce expertise and provide its clients with the benefit of the latest e-business solutions from IBM, including IBM's Windows NT-based technologies, WebSphere and Net.Commerce. "This certification underscores our cutting-edge expertise in Web and e-commerce business solutions, a fast-growing segment in which we are investing considerably to become a leader," stated Karol Brassard, Chairman of the Board and Chief Executive Officer of DTM. Jacques Dextras, Executive Director of DTM's Axsys Division, added: "DTM has a team of over 100 consultants with numerous certifications. This additional accreditation from IBM is a guarantee of quality to assure our present and future clients that they obtain the best e-business solutions on the IBM platform." Involved in computers since 1977, DTM Information Technology Group Inc. is a consulting and systems integration company active in the information technology (IT) sector. The Company specializes in integrated e-business solutions, more specifically the supply and integration of network infrastructures as well as the development of Groupware and e-commerce solutions. Established in Montreal, Quebec City and Toronto, DTM has more than 160 employees. Valuation Model, Comparisons and Targets The notice of transfer listing from MSE to TSE gives us the fully diluted share count. In the Bulletin 99-1522 "An application has been granted pursuant to the realignment of the exchanges for the listing in the industrial category of 3,932,445 common shares, of which 3,593,329 common shares are issued and outstanding and 339,116 common shares are reserved for issuance. " Let's use 4million as the number of shares oustanding for easy calculation purposes. The company did revenues last quarter that exceeded other companies like E, MCF and CX on the TSE. To find the target price, a relative valuation model is used. E / 58m shares oustanding fd / 6.92m last qtr rev's / close 4.34 Dec 9 Market Cap ~ 250million Adjusted Annual Revenue number ~ 4 x 6.92 ~ 28million Price/Rev Ratio ~ 9 MCF / 33m shares oustanding fd / 10.8m last qtr rev's / 8.70 Dec 9 Market Cap ~ 287million Adjusted Annual Revenue Number ~ 4 x 10.8 ~ 43million Price/Rev Ratio ~ 6.67 CX / 18m shares oustanding fd / 5.99m last qtr rev's / 17.50 Dec 9 Market Cap ~ 315million Adjusted Annual Revenue Number ~ 4 x 6 ~ 24million Price/Rev Ratio ~ 13.125 Take 9 as the average. This would put a target market cap for 9 x 4 x 12.6 ~ 450million, on a relative basis. Mind you DTM's last quarter revenue growth is slower than that of the above three, but I believe this was mainly due to the company re-focusing it's core business. This has occured over recent months, and the results from the recent quarter reflect the shift. At 450million, with 4million shares oustanding fd, this puts the target price at 112.50!!! On a more conservative basis, take a company like MGX for example. It trades around 2-3 times sales. DTM's sales per share number is about 10 or 12. Compared to MGX on a relative basis, it should be around 20 to 36 dollars, using the extreme ranges. All this leads to one big conclusion => DTM is extremely undervalued and I'm giving it a tentative target of 15. Short term 2-4 months. The time period is hard to judge, but I believe with the market focused on eBusiness growth, DTM will get recognized. The time period is probably very aggressive, but I think all DTM needs is just one thing to spark it and I'm sure the valuation will just come rushing in. If people learn more about this, I think it can easily head far higher and sooner. Even realistically, if it were to trade over 50... even 100... Anything below 15 or 20 this company is still extremely cheap. This is an undervalued gem =) If you have any further information you would like to share, you can post at the club or send me a note. Cheers. Update December 15th, 1999. I was asked in a message board post to review my pricing model for the upside targets on DTM. My response is on stockhouse. I'm still sticking with my numbers here. [click here] Some points to note: The revenue figures for DTM are still proportionally weighted heavier in hardware sales than professional services related. So in comparing directly with MCF, CX and E, this is could be misleading. I decided to do a quick calculation. From DTM's annual report they have 6.6million dollars down as professional service revenue. Assuming they can maintain this 70% growth rate this puts this fiscal year's estimate at 11 million or so. Applying a price/median revenue ratio of 5 we're looking at roughly a 12-15 dollar target on the stock. In my stockhouse post, I gave slightly lower estimates. Consensus on my own targets is basically 10 within the next two quarters. A few things to look out for is what kind of margins DTM can generate now that they're core business becomes focused towards professional ebusiness services. They aren't an active press releaser so the visibility isn't there at the moment. Let's see if they can start making an effort to get their story out! Relevant Reference Links Bloomberg Online Profile Carlson Online News & Info Stockhouse.com Company Info quote.bloomberg.com members.xoom.com clubs.yahoo.com clubs.yahoo.com | ||||||||||||
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