← Back to Investments

ALTRON LIMITED

AEL JSE Listed

: Investment Analysis: Altron Limited (JSE: AEL) Date:** 09 January 2026

Step 1: Data Gathering & Source Verification

I have reviewed the financial data for Altron Limited (AEL) based on the most recent reporting cycle.

Reporting Periods & Source Documents:

  • Latest Interim Results: Unaudited Consolidated Results for the six months ended 31 August 2025 (H1 FY26).

  • Link to SENS Announcement

  • Latest Annual Financial Statements: Audited Consolidated Results for the year ended 28 February 2025 (FY25).

  • Link to Annual Results Portal

SENS Activity (L12M Highlights):

  • 03 Nov 2025: Release of Interim Results (strong platform growth, dividend declaration).
  • 01 Aug 2025: Effective date for the disposal of Altron Nexus (non-core asset sold).
  • 12 Nov 2025: Director dealings (Werner Kapp - Purchase of shares, signaling insider confidence).

Step 2: Metric Extraction

Note: Share price used for calculations is 2,000c (R20.00) based on closing data from Jan 2026.

| Metric | Value | Notes | | --- | --- | --- | | Market Cap | R8.2 Billion | Mid-cap technology stock. | | Dividend Yield (L12M) | 4.9% | Total Divs: 98c (Final FY25: 50c + Interim FY26: 48c). | | Liquidity Check | ~R2.0m / day | Risk Flag: Average daily volume is ~100k shares. Liquidity is moderate to low; large entries/exits may slip the price. | | P/E Ratio (Continuing) | 10.3x | Based on L12M HEPS (Continuing Ops) of ~195c. | | Net Asset Value | N/A | Metric less relevant for IT/Services companies; P/E and EBITDA are primary valuation tools. |

Step 3: Operational & Strategic Analysis

Business Overview Altron is a technology solutions provider transitioning from a hardware/services heavy business to a "Capital Light" platform-led company.

  • Core Platforms (The Growth Engines): Netstar (Vehicle tracking/Telematics) and Altron FinTech (Payments/Collections). These are high-margin, annuity-based revenue streams.
  • IT Services: Altron Digital Business (Systems integration/Software) and Altron Security.
  • Distribution: Altron Arrow (Electronic components).

Performance Trend (H1 FY26 vs H1 FY25)

  • Revenue: Flat/Slight Decline (-1%) to R4.8bn. This is misleadingly negative; it reflects the "quality over quantity" strategy. They are shedding low-margin hardware revenue.
  • Profitability: Operating Profit +15% (Continuing Ops). This is the key metric. Despite flat revenue, margins are expanding significantly due to the shift toward Platform businesses.
  • Segment Divergence:
  • Platforms: Booming. Netstar subscribers +11%; FinTech Revenue +24%.
  • IT Services: Struggling. Altron Digital Business revenue -10% due to muted corporate IT spend.

Sector Context The South African IT sector is currently facing a "Two-Speed" market.

  1. Macro Headwind: Corporate IT spend (Systems Integration) is under immense pressure due to the sluggish local economy. Large projects are being delayed.
  2. Structural Tailwind: The "Digital Economy" (Fintech payments and Telematics data) is growing at double digits regardless of GDP, driven by adoption and efficiency needs.

Step 4: The Verdict

Bull Case (Why Buy) The "Platform" Pivot is Working: The market is still pricing Altron largely as a legacy IT services business (low P/E), but its profit mix is shifting rapidly toward Netstar and FinTech. These divisions command higher multiples globally. As the annuity revenue base (now >60%) grows, the stock deserves a re-rating from 10x P/E to 13-15x P/E.

Bear Case (Why Sell) Legacy Drag: The Altron Digital Business is bleeding (Operating loss in H1 FY26). If the SA economy remains stagnant, this division will continue to erode the gains made by Netstar/FinTech. Additionally, the Altron Arrow division is in a cyclical global downturn (profit -49%).

Fair Value Estimate R24.00 - R26.00

  • Justification: Applying a conservative 12x P/E on forward HEPS of ~210c (assuming continued platform growth).

Final Rating BUY

Rationale: The "Sum of the Parts" value of Netstar and FinTech likely exceeds the current market cap of the entire group. Management's disposal of Nexus and focus on high-margin platforms is executing well. The 4.9% dividend yield provides a decent "wait-to-get-paid" incentive while the re-rating story plays out.

AI Generated Analysis Last Updated: 2026-01-14