25 May 2012

CSF agrees £1m acquisition

03/01/2012 Miles Nolan

Fast growing data centre group CSF (CSFG) has acquired network infrastructure specialist TWSB for £1.016 million in cash - payable over three years.

Malaysia based CSF has a strategic plan to expand across South-East Asia, thereby creating a hub which is mission critical to its clients. TWSB provides a range of solutions including enterprise security as well as data centre requirements in the telecommunications, education, healthcare, government and financial sectors.

As part of the acquisition, TWSB has provided a profit guarantee of £610,000 over three years commencing on 31 March 2012. CSF argues the deal will strengthen its resources and enhance its ability to work alongside telecommunications providers to ensure it is the 'data centre of choice in the region'.

Interim results to September revealed a near doubling in sales at CSF to £18.4 million, but pre-tax profits dipped to £6 million (2010: £6.5 million) due to a £4.5 million gain in the prior period on a sale and leaseback deal. Cash is strong at £11.7 million, and house broker Cenkos predicts 2012 pre-tax profits of £12.8 million, delivering EPS of 6.6p.

We last recommended CSF as a buy in July at 70.5p, so the dip to 61.5p is disappointing. With ongoing expansion on Malaysia, Singapore, Vietnam, Thailand and Indonesia, there is plenty of scope for further growth. The TWSB deal is attractively priced and should also help enhance its offering. Buy.

Tags: Acquisition, AIM market, Data Centres, Growth company, South-East Asia

Sector: Software & Computer Services

Companies: CSF

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