Bytes Technology Group plc (BYIT.L) | Investment Case

1. Company Snapshot

1.a. Company Description

Bytes Technology Group plc offers software, IT security, hardware, and cloud services in the United Kingdom, rest of Europe, and internationally.The company sells servers, laptops, and other devices; various cloud-based and non-cloud-based licenses; and externally and internally provided training and consulting services.It also offers IT consulting and support services, including IT deployment and training.

The company sells its products and services under the Bytes Software Services and Phoenix brands.It serves small- and medium-sized businesses, enterprises, and public sector organizations.The company was founded in 1982 and is headquartered in Leatherhead, the United Kingdom.

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1.b. Last Insights on BYIT

Bytes Technology Group's recent performance was driven by strong institutional ownership, with 76% of shares held by institutional investors, indicating a high level of confidence in the company's future prospects. Insider buying activity has also been a positive driver, with experts noting that Microsoft's move to reduce Enterprise Agreement fees is not causing significant disruption for value-added resellers, allowing Bytes to maintain its market position. The company's resilience in a challenging economic environment, as highlighted by its ability to navigate global economic pressures, has also contributed to its recent performance.

1.c. Company Highlights

Last Price	348.8
Change Percentage	1.51%
Open	346.8
Previous Close	343.6
Market Cap ( Millions)	842
Volume	317770
Year High	563
Year Low	317.6
M A 50	366.58
M A 200	424.97

FCF Yield	8.15%
Dividend Yield	5.76%
ROE	62.45%
Debt / Equity	1.98%
Net Debt / EBIDTA	-149.52%
Price To Book	8.89
Price Earnings Ratio	15.9
Price To FCF	12.28
Price To sales	3.88
EV / EBITDA	9.84

2. Transcript Summary

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3. NewsRoom

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.69%)

6. Segments

Software

Expected Growth: 9.9%

Bytes Technology Group plc's software segment growth is driven by increasing demand for cloud-based solutions, digital transformation, and cybersecurity needs. The company's strategic acquisitions, partnerships, and investments in emerging technologies such as AI, blockchain, and IoT also contribute to its growth. Additionally, the growing need for data analytics, customer experience management, and IT services further fuels the segment's expansion.

Hardware

Expected Growth: 8.97%

Bytes Technology Group plc's Hardware segment growth of 8.97% is driven by increasing demand for digital transformation, cloud adoption, and cybersecurity solutions. Additionally, the company's strategic partnerships, expanded product offerings, and investments in emerging technologies such as AI and IoT are contributing to its growth momentum.

Services Internal

Expected Growth: 9.9%

Bytes Technology Group's Services Internal segment growth of 9.9% is driven by increasing demand for digital transformation, cloud adoption, and cybersecurity services. Strong relationships with key vendors, such as Microsoft and Cisco, also contribute to growth. Additionally, the company's focus on providing innovative solutions and exceptional customer service has led to increased market share and revenue growth.

Services External

Expected Growth: 9.08%

Bytes Technology Group plc's Services External segment growth of 9.08% is driven by increasing demand for digital transformation, cloud adoption, and cybersecurity services. Additionally, the company's strategic partnerships, expansion into new markets, and investments in emerging technologies such as AI and IoT are contributing to its growth momentum.

7. Detailed Products

Cloud Services

Bytes Technology Group plc offers a range of cloud services, including infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS) solutions, enabling businesses to migrate their applications and data to the cloud.

Cyber Security Solutions

Bytes provides a comprehensive range of cyber security solutions, including threat detection, incident response, and penetration testing, to help businesses protect themselves against cyber threats.

Data Analytics

Bytes offers data analytics services, including data warehousing, business intelligence, and data science, to help businesses gain insights and make data-driven decisions.

Digital Transformation

Bytes provides digital transformation services, including strategy development, solution design, and implementation, to help businesses adapt to the digital age.

IT Services

Bytes offers a range of IT services, including IT consulting, managed services, and technical support, to help businesses optimize their IT infrastructure and operations.

Network and Communications

Bytes provides network and communications solutions, including network infrastructure, unified communications, and collaboration, to help businesses improve communication and collaboration.

Software Solutions

Bytes offers a range of software solutions, including enterprise resource planning (ERP), customer relationship management (CRM), and enterprise content management (ECM), to help businesses automate and optimize their operations.

8. Bytes Technology Group plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Bytes Technology Group plc operates in a niche market, providing specialized IT services, which reduces the threat of substitutes. However, the increasing adoption of cloud-based services and digital transformation may pose a moderate threat to the company's services.

Bargaining Power Of Customers

Bytes Technology Group plc's customers are largely dependent on the company's specialized IT services, giving them limited bargaining power. The company's strong relationships with its customers also reduce the bargaining power of customers.

Bargaining Power Of Suppliers

Bytes Technology Group plc relies on a few key suppliers for its IT services, giving them some bargaining power. However, the company's strong relationships with its suppliers and its ability to negotiate contracts mitigate this risk.

Threat Of New Entrants

The IT services market has high barriers to entry, including significant capital requirements and the need for specialized expertise. This reduces the threat of new entrants to Bytes Technology Group plc's market.

Intensity Of Rivalry

The IT services market is highly competitive, with many established players competing for market share. Bytes Technology Group plc faces intense competition from larger rivals, which may impact its market share and pricing power.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	0.54%
Debt Cost	7.31%
Equity Weight	99.46%
Equity Cost	7.31%
WACC	7.31%
Leverage	0.54%

11. Quality Control: Bytes Technology Group plc passed 7 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Wirtualna Polska Holding

A-Score: 4.9/10

Value: 7.0

Growth: 8.0

Quality: 5.8

Yield: 4.4

Momentum: 0.5

Volatility: 4.0

1-Year Total Return ->

Exclusive Networks

A-Score: 4.9/10

Value: 4.8

Growth: 7.4

Quality: 4.3

Yield: 5.0

Momentum: 2.0

Volatility: 6.0

1-Year Total Return ->

Bytes Technology Group

A-Score: 4.6/10

Value: 3.5

Growth: 6.1

Quality: 9.0

Yield: 5.0

Momentum: 2.0

Volatility: 1.7

1-Year Total Return ->

WiiT

A-Score: 4.3/10

Value: 2.2

Growth: 8.9

Quality: 4.9

Yield: 3.8

Momentum: 2.5

Volatility: 3.7

1-Year Total Return ->

Gigas Hosting

A-Score: 3.9/10

Value: 6.4

Growth: 7.8

Quality: 3.5

Yield: 0.0

Momentum: 0.0

Volatility: 5.7

1-Year Total Return ->

BYGGFAKTA GROUP

A-Score: 3.4/10

Value: 2.5

Growth: 8.4

Quality: 4.1

Yield: 0.0

Momentum: 4.0

Volatility: 1.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-3.58%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.31%

Bytes Technology Group plc - GB00BMH18Q19

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on BYIT

1.c. Company Highlights

Better Quality

Expensive

Stable Momentum

Revenues Miss

Medium Volatility

Fairly Valued

Weak Momentum

Earnings Beats

Revenues Beats

Average Yield

Earnings Miss

Higher Yield

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.69%)

6. Segments

Software

Expected Growth: 9.9%

Hardware

Expected Growth: 8.97%

Services Internal

Expected Growth: 9.9%

Services External

Expected Growth: 9.08%

7. Detailed Products

Cloud Services

Cyber Security Solutions

Data Analytics

Digital Transformation

IT Services

Network and Communications

Software Solutions

8. Bytes Technology Group plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Bytes Technology Group plc passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.49$

Current Price

3.49$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA