Our opinion on the current state of ISA

ISA Holdings (ISA) is a small Alt-X listed IT company offering network, internet, and information security in sub-Saharan Africa. The company claims to employ some of the leading IT security specialists and to have the tools and experience to offer effective information security solutions. In its results for the year to 28th February 2023 the company reported revenue up 1% and headline earnings per share (HEPS) up 34%. More than 90% of the company's revenue is recurring. The company said, "Operating expenditure increased by 22.5% to R25.9 million compared to R21.1 million in the prior reporting period, which is largely attributable to a sizeable increase in payroll expenses". In a trading statement for the six months to 30th September 2023 the company estimated that HEPS would increase by between 18% and 38%. This looks like a good quality IT company that is profitable but has gone through a tough time. The problem is that the share is thinly traded with only about R21 000 worth of shares changing hands on average each day. This makes it dangerous for private investors to buy a meaningful number of shares, however, on a P:E of 9 and a dividend yield of 8,89% the shares look like good value.