On listing day, in September 2014 its share closed 75% higher from the IPO price of R2, the next day saw it close another 28.85% up. Investors clambered for stock in the “new kid on the block” asset manager pushing it higher week after week. After 6-month investors who secured stock at IPO prices had a gain of 300%. The share price defied gravity to hit a high of R18.99 prior to Nene-gate before plummeting back to current levels. Levels last seen on that first trading day back in 2014.
Asset managers share prices typical follow the cycle of the market and economic sentiment. And right now, global sentiment is improving, the US Fed has signaled interest rate increases should only resume in 2020, the ECB and BOE are likely to keep loose monetary policy inline with the US hiking cycle; and a “de-escalation” in the trade wars.
Looking at the numbers, we should see an improvement from increasing asset management fees as the market rises, a once off termination fee boosting earnings over 90% and new products attracting additional capital from clients.
On a PE of less than 10 and a dividend yield near 6%, investors who buy shares at these levels will have a significant margin of safety.
Buy below R3.75 with a target of above R7.00
The week ahead:
- Local Data: Manufacturing: Production and sales (11/04)
- Results Due: AHL, APH (08/04); SNH (11/04); NFP, PFB (12/04)
- LDT (09/04): ABG, ABSP, ADH, GLPROP, DIVTRX, HIL, HLM, MSP, MND, MNP, NRP, PREFTX, REM, SLM, SLMJ, SLA, SFN, SHG, SBK, SBKJ, NBS
- Final Dividend: AFE, AFX, AOX, ANG, BEL, EPP, LBH, LBR, MPT, NED, NBK, SAC, SBV, SVN, SBKP, SBPP, SBPPJ (08/04); LHN (09/04)
Other Economic data releases of interest…
- Tuesday: Unemployment Rate (CH); Italian Retail Sales (EU); NFIB Small Business Index, JOLTS Job Openings, FOMC Member Clarida Speaks (USA); 10-y Bond Auction (UK); Bank Lending, PPI (JP)
- Wednesday: GDP, Manufacturing Production (UK); Main Refinancing Rate, Monetary Policy Statement (EU); CPI, Crude Oil Inventories, FOMC Meeting Minutes (USD)
- Thursday: OPEC Meetings (All day); RBA Financial Stability Review (AUS); Trade Balance (CNY); PPI (USA)
- Friday: Treasury Currency Report (USA)