Stock News: Datacraft firmer on re-rating hopes as earnings rise

Computer network systems integrator Datacraft Asia Ltd edged higher, bucking the decline in the broad market, after Citigroup said it believes the stock should be re-rated amid strong signs earnings are recovering. "Datacraft is a fundamental turnaround story, and we believe the stock deserves to be re-rated, particularly in view of its earnings quality - evident from the sharp decline in receivables days and gross margin improvement over the past few years," Citigroup said in a note to clients. The outlook for Datacraft's operations in China is also upbeat. "As China's banking industry liberalizes, foreign banks are investing in infrastructure as part of their plans to scale up. We believe Datacraft is well positioned to benefit since it already has an established relationship with several foreign banks in Asia," Citigroup said. Citigroup rates Datacraft a "buy" with a target price of 1.38 usd. In August, Datacraft reported that its net profit in the three months to June rose 85 pct year-on-year to 5.33 mln usd, backed by better margins and lower taxes, and said it was optimistic on the outlook for the September quarter. Datacraft is a unit of UK-listed South African IT services company Dimension Data Holdings PLC. Datacraft was up 0.005 sgd at 0.995, off a high of 1.01, with 1.53 mln shares traded.