Avior Capital Markets - Alexander Forbes Equity Holdings Proprietary (1965) AFH | Alexander Forbes Group Holdings | Initiating coverage | More to give

Report

Avior Capital Markets

David Talpert ...

Warwick Bam

AFH | Alexander Forbes Group Holdings | Initiating coverage | More to give

Alexander Forbes (AFH) is the largest retirement fund administrator in SA with c.R430bn in institutional AUA. In our view, AFH has historically been slow to capitalise on its latent member base, adopting a complacent approach to product distribution, capital allocation and cost efficiencies. We believe AFH is engineering a turnaround with the adoption of new IT systems enabling a single customer view. We believe predictive analytics, an enhanced online portal and partnership with Independent Financial Advisers, will ignite AFH's cross-sell strategy and future growth. We model operating profit to accelerate from -2% CAGR since its listing to 8% for the next five years. In our view this is not captured in the rating.

In this note we:

â€¢ Initiate on AFH, laying out the investment case.
â€¢ Provide our view of the potential for pension fund consolidation into lower cost, simplified alternatives such as umbrella funds.
â€¢ Assess the potential impact of Retail Distribution Review (RDR) on the investment and insurance industry.

07/02/2018 37 EN

Underlying

Alexander Forbes Equity Holdings Proprietary

Alexander Forbes Group Holdings Limited is a financial services company. The Company is in the business of creating, growing and protecting clients' wealth and managing their financial risk, assisting its individual clients in securing their financial well-being. It offers integrated retirement, and investment solutions as well as wealth and asset management. Its services include Consulting and Actuarial Services, Retirement Fund Services, Healthcare Services, and Trust and Beneficiary Services. The Company provides valuations and varied employee-benefit consulting and actuarial services. It offers healthcare consulting, health management solutions and technical advisory services. The Company offers solutions for individuals, including money management, budgeting and savings.

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ZAE000191516 Johannesburg Stock Exchange South Africa

Provider

Avior Capital Markets

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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Analysts

David Talpert

Warwick Bam

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AFH | Alexander Forbes Group Holdings | Initiating coverage | More to give

Avior Financials | Alexander Forbes | Transaction Capital | JSE trading stats

Alexander Forbes | Stranded in a sea of costs

Alexander Forbes | Dust has settled

Tiger Brands | ESG | Pressed to execute

SA Investment Strategy | Review of January 2020 for SA investors: Coronavirus weighs on the ZAR

SA Banks | Low credit risk in commercial property | Time to buy SA banks

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