Avior Capital Markets - Avior Financials | Capitec impact on funeral insurance market and H1 20 results

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Avior Capital Markets

David Talpert ...

Harry Botha
Warwick Bam

Avior Financials | Capitec impact on funeral insurance market and H1 '20 results

In this week's Avior Financials note:

Capitec is disrupting the funeral insurance market in South Africa. Since launching funeral products in May '18, Capitec has issued 1m policies. We benchmark Capitec's annualised new business volumes against traditional insurers and banks. Based on our estimates Capitec is selling 60% of the new business volumes of Old Mutual.

Capitec's H1 '20 results were similar to our expectations. In our view the results showed that Capitec will continue to shift the loan book towards lower risk loans. Capitec did not allude to any new standalone product launches (just enhancements of existing products). We believe management will focus on new products once the integration of Mercantile Bank is complete. We continue to find the share expensive at current levels considering the potential earnings growth over the next five years.

Cell C's latest disclosure shows that SA banks' debt exposure is similar to Dec '18 levels. Nedbank has R790m exposure to Cell C. RMB/ABSA/â€NVAMâ€ have R1.25bn exposure to Cell C in aggregate.

02/10/2019 9 EN

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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.

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Analysts

David Talpert

Harry Botha

Warwick Bam

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Avior Financials | Capitec impact on funeral insurance market and H1 '20 results

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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