The COVID-19 pandemic has brought the world into exceptionally difficult and largely uncharted waters. In reality, this pandemic has forced governments across the globe to introduce aggressive and severe emergency measures and restrictions in a robust attempt to contain the virus spread. Undoubtedly, such measures have been a particular threat to, the banking, hotel and catering, as well as the transport and aviation industries.
While the rest of the industries are tanking from the damaging impact of the ongoing coronavirus pandemic, technology-oriented businesses have found methods to hold steady and even thrive in a COVID-19 world.
As a specific example within the local scenario, BMIT Technologies plc (BMIT) recently issued a strong Q3 results update, demonstrating a 6.1% revenue increase on a comparative basis. The main contributors for this growth were cloud services and connectivity services which during H1 2020 grew by 47% and 13%, respectively.
In addition to the aforementioned positive financial performance reported for the first three months of the year, the group also recently announced that it has acquired 15% of EBO Ltd (EBO) for the price of circa €1.5m. EBO is a technology company focused on the provision of artificial intelligence solutions in the healthcare, iGaming and financial services sectors.
EBO is a mature start-up company, which kicked-off operations in 2018. Given the attractiveness of its industry, the company has interesting growth prospects, including growth in the UK’s public (NHS) and private health sectors in which EBO is already present through its fully-owned UK subsidiary – EBO.ai (UK) Ltd.
The group acquired this stake in EBO through internal funds and BMIT views this transaction as a medium to long-term investment. EBO is expected to continue operating as a standalone company, and is expected to assist BMIT reach international partners.
Despite experiencing such growth, BMIT still went through several pandemic related challenges mainly concerning the group’s datacentre line of business. Management further reported that in order to retain some of its existing clients who have been hit hard by the pandemic, BMIT provided such clients with new and more favourable contract terms.
In continuation to one of my previous articles, management confirmed that the group is still re-evaluating the strategic decision to develop the Zejtun data centre. Until the current COVID-19 environment stabilises further, management expects such project to remain on hold for the time being.
However, it is also important to keep in mind that notwithstanding the present distressed environment, the group exceeded expectations and reported a robust financial performance. It is evident that despite the re-evaluation of the Zejtun data centre development, the group is actively pursuing new growth opportunities.
Notwithstanding the turbulent environment driven by the pandemic, the group maintained its dividend distribution policy and is currently offering a net dividend yield of 4.5%. Additionally, BMIT’s recurrent capex of €1m is relatively low, which continues to strengthen the group’s cash generation ability.
The Calamatta Cuschieri Traders Blog is available daily on CC WebTrader. Other market coverage including coverage of the International Bond Markets is also available.
The information provided on this website is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Similarly any views or opinions expressed on this website are not intended and should not be construed as being investment, tax or legal advice or recommendations. Investment advice should always be based on the particular circumstances of the person to whom it is directed, which circumstances have not been taken into consideration by the persons expressing the views or opinions appearing on this website. Calamatta Cuschieri & Co. Ltd. (CC) has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website. You should always take professional investment advice in connection with, or independently research and verify, any information that you find or views or opinions which you read on our website and wish to rely upon, whether for the purpose of making an investment decision or otherwise. CC does not accept liability for losses suffered by persons as a result of information, views or opinions appearing on this website.
This website is owned and operated by Calamatta Cuschieri & Co. Ltd (Co. Reg. No. C13729) of 5th Floor, Valletta Buildings, South Street, Valletta VLT 1103, Malta. CC is licensed to conduct Investment Services in Malta by the Malta Financial Services Authority.