Pinnacle Holdings is a prominent South Africa-based information and communication technology product and services provider. The group is one of the largest of its kind in Africa, offering a diversified portfolio of hardware and software products, implementation solutions, maintenance services and structured finance solutions. Operations are carried out through various segments including ICT, IT Projects and Services and Financial Services.

The ICT division comprises ICT hardware assembler and distributor Pinnacle Africa and IT infrastructure and software distributor AxizWorkgroup. The operating brands in the IT Projects and Services division include design and development companies Infrasol and Merqu Communications. Other subsidiaries include Datanet, Datacentrix, PBS Africa and Modrac. Finance solutions are provided to end users for sale through Centrafin Limited.

The group recorded revenue of R10.9 billion in 2016. Pinnacle Holdings shares are listed on the Johannesburg Stock Exchange with a market cap of R3 billion. Pinnacle Holdings share price looks set for good gains in the medium term.

After several years of rationalisation and muted performance, Pinnacle Holdings had a sharp revenue increase of almost R3 billion (37.3%) for the 2016 financial year. Net profit increased by over R100 million to R381 million, with earnings per share increasing by 15.4% to 207.1 cents. The group had an active year, making a move to buy Datacentrix and completing the disposal of assets held for sale, with R655.4 million of debt repaid during the year. There was still R241.5 million cash on hand at the end of June 2016, and bank overdrafts were reduced from R109.4 million to R18.6 million, reflecting an increased focus on cash generation.

The ICT division reported a 21% increase in revenue, as it continues to focus on expansion and investment into new areas such as high-end data centre storage, Big Data and security infrastructure. Margins have however been eroded by tougher market conditions and a reluctance from the market to buy some products. The divisions contributed R185 million worth of dividends, indicating its value as a supplier of capital.

There was good customer retention in the Services division, and the purchase of an increased stake in Datacentrix, along with a move to buy 51% stake in solar solutions company Solareff, have already yielded solid contributions. Internet technologies company Intdev was also acquired in March 2016, and is set to broaden the group’s exposure to the telecommunications and cloud technologies sectors.

The live online chart shows that Pinnacle Holdings share price has underperformed in recent years, but the shares are rebounding as market conditions stabilise and the group continues to make bold and meaningful acquisitions. Many investment analysts forecast that Pinnacle Holdings shares could be at the beginning of a healthy upward growth trajectory, making them a good value buy for investors at present. The group is in a much better financial position than in the past and will most certainly start attracting attention.

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