Investec is an international, specialist bank and wealth manager that provides a range of financial products and services to a niche client base mainly in the United Kingdom and South Africa. Investec has a dual-listed company structure with primary listings on the London and Johannesburg Stock Exchanges.
The company trades at a substantial discount to its peers even when accounting for the UK business. Investec can benefit from high(er) interest rates and has rand hedge qualities in the event of further rand weakness.
Technically, a price that appears to be at the start of wave 5 of the Elliott Wave Theory, makes the share attractive as an investment opportunity (see the notations on the chart as well as the insert).
According to the Elliot Wave Theory, an impulse wave consists of 5 waves in the direction of the dominant trend (waves are numbered numerically). The fifth wave is typically the final wave in the pattern and represents the strongest move in the direction of the prevailing trend. In this case, the pattern is bullish, suggesting that the share is expected to experience a strong upward movement.
According to the RSI (Relative Strength Index), the stock will be overbought at ~R125. This classifies our profit target of R121 as realistic.
We suggest a low capital at-risk allocation to this trade.
Share Information
| Share code | INL |
|---|---|
| Industry | Financial Services |
| Market Capital (USD) | 102.45 billion |
| One year total return | 27.55% |
| Return year-to-date | -0.86% |
| Current price(USD) | 106.58 |
| 52 weeek high(USD) | 118.28 |
| 52 week low(USD) | 67.75 |
| Financial year end | March |
| Closing paragraph | The share has gained good momentum year-to-date and remains above its 200-day simple moving average. |
Consensus Expectations (Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 0.83 | 0.69 | 0.78 | |
| Growth (%) | -15.88 | 11.67 | ||
| Dividend Per Share (USD) | 0.31 | 0.32 | 0.35 | |
| Growth (%) | 1.94 | 11.71 | ||
| Forward PE (times) | 6.46 | 5.78 | ||
| Forward Dividend Yield (%) | 7.05 | 7.88 | ||
| Closing paragraph | Earnings growth is expected to recover over our forecast horizon. The dividend yield is also attractive. | |||
Buy/Sell Rationale
Technical Analysis:
Fundamental view:
| Share Name and position |
AMS - Take Profit (Close the position) |
N91 - Stop-loss (Close the position) |
CLS - Stop-loss (Close the position) |
|---|---|---|---|
| Entry | 1003.84 | 43.00 | 267.92 |
| Current | 1137.13 | 38.85 | 246.88 |
| Movement | 13.3% | -9.7% | -7.9% |
| Summary text | We have exited the trade to lock in profit. The share is in a correction phase within the lower range of the linear regression channel pattern. | The trade reached our stop-loss level, and we closed the position. | The trade reached our stop-loss level, and we closed the position. |
| Share Name and position |
MNP - Time Exit (Close the position) |
LHC - BUY (Continue to hold) |
PRX - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 284.46 | 19.30 | 1387.97 |
| Current | 311.92 | 20.21 | 1421.26 |
| Movement | 9.7% | 4.7% | 2.4% |
| Summary text | We are at time to exit for the trade (22 May 2023). |
The price has shown signs of a potential upward trend, which is worth monitoring closely. Trading slightly above its 200-day simple moving average.
Our take profit target remains at R22.20, with a trailing stop-loss at R18.95. Time exit: 26 June 2023. |
The share continues to hold above crucial support levels and remains attractive. Trading above its 200-day simple moving average.
Our take profit target remains at R1606, with a trailing stop-loss at R1327. Time exit: 15 August 2023. |
