NEW YORK, Dec. 19, 2003 (PRIMEZONE) -- The following is an investment opinion issued by Investrend Research Syndicate:
Fundamental Research Corp. has reiterated its "Buy" rating and fair value of C$1.20 on Datec Group Ltd. (TSX Venture Exchange:DGL) following a decline in the company's stock price to close at C$0.53 on Thursday.
According to analyst Brian Tang, CFA, Datec trades at just 11.2 times Fundamental's 2003 EPS estimate, and is "highly undervalued" relative to its peers and the market in general. Fundamental's fair value for Datec is C$1.20.
The note also comments on Datec's recent completion of the acquisition of Certus Consulting as strengthening Datec's position in professional services in Australia and New Zealand. Tang estimates that Datec only paid 7.5 times earnings for Certus, and that the acquisition is EPS accretive. Consideration will be provided by shares and debt. The research report mentions that the debt is structured to be tax efficient under New Zealand tax laws.
Tang also clarifies a recent announcement made by Datec regarding a lawsuit recently announced. Although at the early stages, the analyst says, "at this point, investors should realize that any award has positive implications for the company." Datec is seeking compensation in the lawsuit, and is not being sued. A company in which Datec has a 25% interest, is initiating a lawsuit against the Independent Public Business Corporation of Papua New Guinea for failure to meet certain conditions regarding an acquisition.
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The fee for Fundamental's standard coverage is $25,000, and the fee is being paid by Datec Group Ltd.
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