Altron a stock market star – MyBroadband

Altron has been one of the best-performing shares on the JSE this year, which shows that the market trusts the company, its management, and its chief executive.

Altron is one of South Africa’s most iconic technology companies. Bill Venter founded it in 1965 to service the electrical, electronics, and telecommunications industries.

It grew rapidly and acquired many top companies along the way. High-profile acquisitions include Autopage, Netstar, Powertech, and Bytes Technology Group.

Today, Altron is a diversified technology group with a strong foothold in most sectors in South Africa. Most South Africans use Altron daily without knowing it.

On 1 October 2022, Altron appointed Dimension data stalwart Werner Kapp as the company’s chief executive.

Under Kapp’s leadership, the company developed a strategy focused on customer service levels and growth.

“We are guided by a clear strategy to become the leading platform and IT services business in our chosen markets,” Kapp said.

On 31 July 2024, Altron released a trading statement which showed why the company had become a favourite among many investors.

Continuing headline earnings per share and continuing earnings per share will be at least 20% higher than the comparative six months ended 31 August 2023.

Altron said the successful implementation of the profit improvement strategies resulted in a stronger performance in the second half of the 2024 financial year.

This positive momentum has continued into the 2025 financial year, leading to improved year-to-date performance.

Its performance has helped Altron to deliver exceptional share price returns in the year to date, with a total return of over 70% since January.

This puts Altron into the pool of top-performing shares on the JSE for 2024, which shows it is the preferred technology stock among many investors.

Bytes Technology Group unbundling

Altron announced in April 2020 that it would spin off Bytes UK separately on the London Stock Exchange as Bytes Technology Group Limited.

Bytes is a UK-based IT software solutions company specialising in cloud and security products. Altron acquired Bytes in 2008 for R14 billion.

The unbundling was seen as a way to unlock shareholder value as Bytes within the Altron conglomerate was not priced fairly.

Bytes was one of Altron’s most valuable assets. After it was unbundled, Altron’s revenue fell by R8.3 billion.

Bytes was also Altron’s biggest profit driver. In the final two years that Bytes’ results were reported within the Altron group, it contributed more than 80% of Altron’s total net income.

Bytes’ unbundling expectedly had a significant impact on the Altron Group’s revenue and profit as it was a core driver in both metrics.

From 2022 onwards, Altron has reported a net loss, which has deepened to its most recent result of a R164 million loss for the 2024 financial period.

These results include both continuing and discontinued operations.

Altron Managed Services

Altron’s managed services segment supports and maintains enterprise-wide information products and services.

It also used to include Altron Nexus, an enterprise connectivity and critical communications business.

In the past financial year, Altron Nexus was not awarded the contract to work on phase 3 of the Gauteng Broadband Network project after working on phases 1 and 2.

Since then, Nexus as a business was classified as “held for sale” and formed part of the group’s discontinued operations. Altron is still seeking a buyer for Nexus.

The segment’s revenues have grown since the Bytes disposal. However, removing Nexus’ revenue has been a blow to the segment’s revenue generation.

Digital Transformation

The digital transformation segment includes three divisions: Altron Systems Integration, Altron Karabina, and Altron Security.

• Altron Systems Integration provides IT services, including networking, data management, security, cloud services, AI, and custom technology solutions.

• Altron Karabina manages and secures companies’ IT systems, from Microsoft software solutions to cloud services.

• Altron Security provides security to customers on various devices and platforms.

The segment experienced some decline in 2022. However, revenue grew into 2023 and continued its strong performance in 2024.

Altron’s own platforms

Altron also has its own platforms, including Netstar, Altron FinTech, and Altron HealthTech.

• Netstar is a vehicle and fleet tracking platform.

• Altron FinTech is a payment solutions platform.

• Altron HealthTech is a practice management software aimed at the healthcare industry.

This segment has seen the largest growth in the group, with revenue growing from around R2.8 billion in 2020 to R3.5 billion in the last financial year.

Netstar currently contributes 58% to the segment’s revenue, with Altron FinTech at 31% and Altron Healthcare at 11%.

Cost management and profitability

As of the past financial year, Altron held a significant number of businesses under “assets held for sale.” These include Altron Rest of Africa, Altron Nexus and Altron Document Solutions.

The group also sold Altron Technologies Namibia, Altron BTG Kenya, and Altron BTG Rwanda in the 2024 financial year.

Even though the “held for sale” companies are no longer reported as part of continued operations, they still have very real costs associated with them.

Considering only Altron’s continuing operations, the group has delivered strong revenue growth with impressive profitability.

Altron’s net profits from continuing operations increased from R122 million in 2020 to R433 million in 2024, representing a net profit margin improvement from 1.7% to 5.2%.

This is music to investors’ ears, which explains the strong share price performance over the last year.

Investors also know that profits will be made when the “held for sale” businesses are sold, and the share price represents this sentiment.