Is Capitec out of puff?

Good Morning Voornaam,

What are you doing at lunchtime tomorrow? If you're free at 12pm, put on your equity analyst hat while you eat your lunch and attend the Unlock the Stock session featuring the management team of TWK Investments. You need to register here.

To see what this platform is all about, you can watch the recording of the most recent event that featured Piet Viljoen and Jan van Niekerk representing investment holding company Astoria. As you'll see in this video, there's a management presentation and then a vibrant Q&A session, so it is well wort h attending the live event.

Other ways to learn this morning

Capitec - I'm a long way from being long

In case you don't know, "being long" means having a position in a stock where you hope it will increase in value. At this valuation, I would be long Transnet before being long Capitec. Perhaps I'm just feeling more opportunistic after reading Afrimat's c omment on Transnet that came out yesterday.

Cheekiness aside, the reality is that Capitec cannot grow at high rates forever. At some point, the gain in market share slows down and the economic challenges of South Africa start to hit the business. The bank has achieved extraordinary things to get to this point, but the market put an even more extraordinary valuation on the company. In the latest results, HEPS didn't go up because of a great revenue performance. No, it went up because the staff got smaller bonuses, which was enough to offset a major jump in impairments.

Would you like to pay a huge premium to book value for a business that grew earnings because the staff earned less? Me neither.

In addition to the Capitec update and numbers from Afrimat (along with interesting commentary), I have copper news for you from Anglo American and Copper 360. There's also an AUM update from Ninety One and a successful debt restructuring at Sasol.

I know you're busy, so here's a whirlwind update

Some people are short Capitec. We are all short on time. To help with that, the Ghost Wrap podcast is designed to bring you my views on the most interesting stories of the week, packaged into an 8 - 10 minute podcast.

The latest episode brings you insights into Aveng, PSG Konsult, De Beers (with a read-through into Richemont), Alphamin, Universal Partners, Stor-Age, Sappi and Glencore. Ghost Wrap is brought to you by Mazars.

A Chinese boose to commodities

The dollar rally has faded, helping the rand move back below R18.20. TreasuryONE notes today's local CPI release and highlights an expectation of 6.9% year-on-year vs. 7.0% in February. This is unlikely to provide much volatility in the greater scheme of things.

Positive Chinese GDP and Production numbers sent metal prices on a rally today, which is terrific news for South Africa. Palladium registered a 5% gain on the day. Gold is still trading above $2,000.

And finally, in an article that brings together the currency and equity markets, Nico Katzke of Satrix wrote about tactical vs. strategic hedging of the rand in a balanced portfolio. It's a great read.

Good luck out there today!

You should expect us in your inbox Monday – Friday. If you don’t receive an email, please check your spam, or junk folder and “move us” into your primary inbox to ensure you get it each morning.

Disclaimer
Our content is intended to be used and must be used for informational purposes only. You must do your own analysis before executing any investments or strategic decisions, based on your own circumstances. We do not provide personalised recommendations or views as to whether an investment approach or corporate strategy is suited to the needs of a specific individual or entity. You should take independent financial advice from a suitably qualified individual who gives due regard to your personal circumstances.
Whilst every care is taken, we accept no responsibility or liability for any errors or omissions in any of our content.
The views, thoughts and opinions expressed in our content belong solely to the author or quoted individuals and/or entities, and not necessarily to the author's employer, organisation, committee or other group or individual, or any of our affiliates or brand partners.