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As the rally in South Africa’s banking stocks continues, Investec has seen its share price growth overtake not only its peers but the benchmark JSE All Share Index (Alsi) as well.
Over the past three years, Investec’s share price has skyrocketed more than 95 percent, leading the gains seen in the banking sector by far and surpassing that of the JSE Alsi, which saw its value rise by nearly 38 percent over the same period.
Behind Investec is Absa (32,5 percent), Capitec (26,06 percent) and Nedbank (14 percent), with Standard Bank and FirstRand lagging behind with single-digit growth of 6,97 percent and 5,73 percent respectively.
Kokkie Kooyman of Denker Capital tells Moneyweb Investec was previously “mispriced” and has been experiencing a rerating following its separation from its investment arm, now Ninety One, with the efforts of CEO Fani Titi and his management team starting to show.
Titi was appointed CEO in 2018. Prior to this, Investec was not well managed, according to Wayne McCurrie of FNB Wealth and Investments.
“They were maybe too aggressive, they maybe expanded too quickly, and when he [Titi] took over, he said ‘We’re going back to basics . . . we’re going to cut unprofitable businesses, we’re not going to worry about prestige’ – and he’s doing a very successful job,” says McCurrie.
However, despite its good earnings, uncertainty remains in its UK business, where the economy faces threats of economic stagnation, says Kooyman.
“It’s still cheap, it’s a good buy, but the problem now is that about half of its assets sit in the UK, which is facing a recession.
So there’s a lot of uncertainty about the quality of the loan book in the UK.” – Moneyweb
Online Reporter