Datong

Intelligence gathering technology venture Datong (DTE) has reported a fall in sales in the six months to March, due to a delay in payments from an unnamed customer.

The AIM-quoted company, which does not disclose the names of any of its customers (which are intelligence agencies) did however also declare a tripling in pre-tax profits from £202,000 to £762,000, with net cash remaining steady at £1.57m (2010: £1.67m).

Across its divisions its 'own products' offering performed well, growing sales from £3.36m to £5m but third party products reported a substantial fall - from £4.05m to £1.3m due to what Datong said was the 'protracted sales cycles being experienced in the Rest of World territories.' In an interview with Growth Company Investor finance director Stephen Ayres remarked that the company 'can now say that the US (intelligence) market has recovered' also arguing that the UK is growing strongly.

Analysts at house broker Canaccord are forecasting sales of £12.5m (2010: £14.1m) for the year to September 2011, profits of £1.1m and EPS of 8.1p and 9.3p pencilled in for 2011 and 2012, respectively.

An unusual company to examine, due to the nature of its work, Datong is understandably secretive about not revealing information regarding its customers or what sort of technology it has under development. With the threat of terrorism unlikely to recede the shares, last recommended by Growth Company Investor in February at 60.25p, and currently trading at seven times 2011 earnings remain a hold.