By Peet Serfontein & Pritu Makan
We initiate a long position. Our upside target is set at R145. We recommend a stop-loss at R124.
The Johannesburg Stock Exchange (JSE) is Africa's premier exchange. It has operated as a marketplace for the trading of financial products for over a century. In this time, the JSE has evolved from a traditional floor-based equities trading market to a modern securities exchange providing fully electronic trading, clearing and settlement in equities, financial and agricultural derivatives and other associated instruments and has extensive surveillance capabilities. The JSE is also a major provider of financial data and information.
The JSE is a defensive company with strong cash generating ability and offers a good dividend yield. The eventual return by investors to emerging markets, an improvement in primary activity, and still low local asset valuations could see volumes pick up further over the medium term. The counter could be a good hedge against market shocks as these tend to lead to an increase in volumes traded.
Technically, the price is in a trough according to the Elliott Wave theory, which makes for an attractive investment opportunity. The analysis depicted in the insert suggests a bullish outlook for the share, as it demonstrates a series of higher peaks and higher troughs, indicating an upward trend in the price.
The price is also in the accumulation phase of the Wycoff price cycle - indicating the early stages of a new uptrend, where smart money, institutional investors and informed traders are accumulating shares at discounted prices before a significant rally.
The price remains above its 200-day simple moving average (SMA) indicating a sustained uptrend and long-term strength in the share. The start of upside momentum, according to the Moving Average Convergence Divergence (MACD) indicator, also supports the trade idea.
We suggest a medium capital at-risk allocation to this trade. Increase exposure for a break above R130.
| Share Information | |
|---|---|
| Share Code | JSE |
| Industry | Financial Services |
| Market Capital (ZAR) | 11.28 billion |
| One Year Total Return | 61.38% |
| Return Year-to-Date | 8.20% |
| Current Price (ZAR) | 130.62 |
| 52 Week High (ZAR) | 132.47 |
| 52 Week Low (ZAR) | 80.50 |
| Financial Year End | December |
| The share price has delivered a robust recovery since the lows of last year, with several technical indicators guiding for further upside potential. Expect moderate volatility in the price going forward. | |
| Consensus Expectations (Bloomberg) |
||||
|---|---|---|---|---|
| FY24 | FY25E | FY26E | FY27E | |
| Headline Earnings per Share (ZAR) | 11.29 | 11.55 | 12.16 | 11.91 |
| Growth (%) | 2.28 | 5.22 | -2.02 | |
| Dividend Per Share (ZAR) | 7.84 | 8.52 | 8.90 | 8.57 |
| Growth (%) | 8.61 | 4.51 | -3.70 | |
| Forward PE (times) | 11.31 | 10.75 | 10.97 | |
| Forward Dividend Yield (%) | 6.52 | 6.81 | 6.56 | |
| Current consensus earnings growth forecasts seem low, we think there is upside risk to current estimates. | ||||
Buy/Sell Rationale:
Technical Analysis:
Fundamental view
| Share Name and Position | VOD - BUY (Continue to hold) |
CML - BUY (Continue to hold) |
APN - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 109.87 | 37.75 | 171.38 |
| Current | 117.76 | 39.70 | 176.66 |
| Movement | +7.2% | +5.2% | +3.1% |
|
The price volume swing remains of interest. Remains above its 200-day SMA. However, it seems like the 200-week simple moving average acted as major resistance. Upside momentum has halted, which is a concern.
Our profit target is R125, with a trailing stop-loss at R111. Exit the trade around 7 April 2025. |
The price is at the pivotal point of crossing both the 200-day and 200-week SMA which remains of interest. Fading downside momentum supports the idea.
Out take profit target is set at R42 with a trailing stop-loss at R38. Time to exit: 19 May 2025. |
The price is testing major support which remains of interest. Remains below its 200-day SMA, and the trade idea is regarded as a counter-trend strategy. Upside momentum has resumed.
Our profit target is R196, with a trailing stop-loss at R167. Exit the trade around 26 May 2025. |
| Share Name and Position | GRT - BUY (Continue to hold) |
MRP - BUY (Continue to hold) |
LHC - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 13.22 | 244.77 | 14.98 |
| Current | 13.06 | 234.59 | 14.19 |
| Movement | -1.2% | -4.2% | -5.3% |
|
The price is trading at one of the highest price bins in its price distribution which remains of interest. Testing its 200-day simple moving average. Fading downside momentum supports the trade strategy.
Our profit target is R16, with a trailing stop-loss at R12. Exit the trade around 17 November 2025. |
The price is in a trough according to the Elliott Wave theory which remains of interest. Dipped below its 200-day simple moving average. Downside momentum is a concern.
Our profit target is R287, with a trailing stop-loss at R228. Exit the trade around 21 April 2025. |
The interaction between the price and its 200-day moving average continues to be an area of significant interest. However, it recently dipped below its 200-day moving average. Downside momentum is a concern.
Our profit target is R17.50, with a trailing stop-loss at R14. Exit the trade around 14 July 2025. |
FNB Stockbroking and Portfolio Management (Pty) Ltd, a subsidiary of FirstRand Bank Limited, an authorised Financial Services Provider and authorised user of the JSE limited (Reg no: 1996/011732/07). This Publication note is issued by FNB Stockbroking and Portfolio Management (Pty) Ltd for the information of clients only and should not be produced in whole or part without prior permission. Although FNB Stockbroking and Portfolio Management (Pty) Ltd is an Authorised Financial Services Provider, any opinions and/or analysis contained in this Publication are for informational purposes only and should not be considered advice, including but not limited to financial, legal or tax advice, or a recommendation to invest in any security or to adopt any investment strategy. The information contained herein has been obtained from sources/persons which we believe to be reliable but is not guaranteed for correctness, completeness or otherwise and we do not assume liability for loss arising from errors in the information or that may be suffered from using or relying on the information contained herein irrespective of whether there has been any negligence by us, our affiliates or any other employees of us, and whether such losses be direct or consequential. As market and economic conditions are subject to rapid change, any comments, opinions, and analysis is rendered as of the date of publishing and may change without notice. Such changes may have a material impact on the outcome of any investment. Securities involve a degree of risk and are volatile instruments. Past performance is not indicative of future performances. Securities or financial instruments mentioned in the Publication note may not be suitable for all investors and FNB Stockbroking and Portfolio Management (Pty) Ltd has bares no responsibility whatsoever arising from or as a consequence hereof. The material is not intended as a complete analysis of every material fact regarding any share, instrument, sector, region, market, country, investment, or strategy. The recipient of this Publication must make their own investment decision and is advised to contact his relationship manager for a personal financial analysis prior to making any investment decisions. Copyright 2018 by FNB Stockbroking and Portfolio Management (Pty) Ltd.
