Avior Financials | Old Mutual and MTM trading updates | Jun '19 BA 900 data | GTB results | Specialty Finance valuations and ASISA stats
In this week's Avior Financials note:Old Mutual's H1'19 trading statement was disappointing. While, the African macro-environment remains a headwind OMU's SA operations are undervalued in our view at a rolled forward P/E of between 7x and 8x.
Momentum (MTM) expects normalised headline earnings to rise 45% to 65% (Avior: 42%) indicating a positive operating turnaround. The recovery in earnings reflects management's actions to restore profitability.
The PA/SARB BA 900 data for Jun '19 shows possible pressure on FirstRand and Investec's credit impairment charges. Capitec's provisions to advances ratio has stabilised at c.19.3% since Mar '19 versus our forecast of 19.7% by Aug '19. The trends continue to support our view that FirstRand will outperform peers in terms of retail banking margins and revenue growth. Despite muted unsecured lending advances growth, we expect Capitec's credit card advances (R4.2bn at Jun '19, growth in chart above, right), customer gains (transactional/current account growth in chart below, left) and lower credit impairment charges to support income statement earnings growth in H1 '20.
Absa released additional disclosure on its Everyday Banking segment. The segmental data highlights the pressure on Absa's deposit margins (also evident in NED's detailed disclosure).
GTB's H1 '19 results showed that management believes single-digit earnings growth (H1 '19: 3.5%) is not enough for GTB. The Group is considering making acquisitions ex-Nigeria to bolster its presence in other regions and drive earnings growth.
In our view, Investec, JSE, PSG and Peregrine are undervalued at current levels.
The ASISA stats show quarterly net inflows of R25bn in Q2 ‘19 with net inflows of R20bn excluding money market.
Momentum Metropolitan Holdings Limited, formerly MMI Holdings Limited, is a financial services company. The Company's businesses include long and short-term insurance, asset management, investment, healthcare administration, health risk management, employee benefits, and client engagement solutions, including financial wellness and rewards programs. Its segments include Momentum Retail, which focuses on the upper retail segment and the small business segment in South Africa, and offers wealth creation, risk and savings solutions; Metropolitan Retail, which focuses on the entry-level market in South Africa, and offers savings, risk and funeral products and solutions; Corporate and Public Sector, which focuses on medium to large corporates, affinity groups, labor unions and the public sector institutions; International, which operates in the rest of Africa, India and the United Kingdom, and Shareholder Capital, which is responsible for the management of the capital base of the Company.
Old Mutual Limited is a financial service company, which is focused on providing financial solutions to individuals, businesses, corporations and institutions across 17 countries and three regions Africa and Asia. Its business includes Old Mutual Personal Finance offers wealth creation and protection products, as well as asset management, in the middle-income market; Old Mutual Mass & Foundation Cluster offers savings and protection products to customers in the lower-income and foundation market; Old Mutual Corporate provides investment, insurance and consultancy services to retirement funds and companies of all sizes; Old Mutual Wealth & Investments Cluster offers clients access to an array of investment offerings, styles and asset classes; Old Mutual Insure that provides short-term insurance services to personal, commercial and corporate customers, and Old Mutual Africa offers life and savings, property and casualty, asset management and banking services.
Avior is a globally recognised capital markets research and trading firm, with the broadest research coverage within the region, with 100+ SA and 20+ SSA companies under coverage. Avior services clients from offices in London, Cape Town and Johannesburg.
Our research quality is consistently recognised in local and global surveys, with 18 analysts currently rated in their respective sectors (FM 2017). Value add through in-depth, innovative, high quality and consistent research with comprehensive underlying fundamental modelling supported by regular analyst and roadshow interactions.
Avior has proven that by working closely with our clients we can mutually develop dominant positions in certain sectors, going from strength to strength. Avior has a dedicated ESG team, having been ranked #1 in Corporate Governance research since 2008.
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