Avior Capital Markets - Investec Limited (101G) Investec | Charting a more profitable course - *Forecasts updated

Report

Avior Capital Markets

Harry Botha

Investec | Charting a more profitable course - *Forecasts updated

Please note that we have changed our forecasts compared to the initial version of this report. Our target price and earnings forecasts have increased. The changes relate to costs in the Asset Management business (impact on target price) and credit impairment charges in the UK bank (no material impact on target price). Investec have changed the methodology for the staff compensation to operating income ratio. The ratio now excludes certain non-compensation related staff costs such as staff training. Investec have also neutralised the income statement impact (revenue and cost) of Investec Asset Management employees' compensation in the form of investment in the asset manager's funds. We have reduced our forecasts for UK credit impairment charges based on guidance from management.

23/05/2018 17 EN

Underlying

Investec Limited

See profile

ZAE000081949 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.

See profile

Analysts

Harry Botha

Other Reports on these Companies

Avior Capital Markets

Investec | Seeing opportunity

Investec should complete its planned demerger with its Asset Management operations (to be renamed Ninety One) in Mar '20. We believe the demerger will result in greater cost and capital efficiency in the banking operations and higher growth potential for Ninety One. We expect the greatest valuation upside for Investec shareholders to stem from improved profitability in the UK bank, as Investec gains scale in its private banking operations and keeps a lid on cost growth. The demerger will increase Investec's capital adequacy levels (+c.1.3% in the UK and +c.0.6% in SA). We expect the bank t...

January 8, 2020 January 8, 2020 16 EN

Avior Capital Markets

Investec | Banking on progress

Investec%u2019s H1 %u201920 results for the Banking and Wealth management operations showed divergent trends in its operations by geography, as the SA operations delivered strong earnings growth in challenging conditions while the UK lagged due to lower investment banking revenues and wealth management investment spend. We expect Investec%u2019s medium-term focus on improved cost and capital efficiency to support the Group%u2019s earnings growth in FY %u201821f and %u201822f despite our forecasts for higher credit impairment charges in SA and the UK. We believe the Group%u2019s share price o...

January 8, 2020 January 8, 2020 16 EN

Avior Capital Markets

Investec | Value hidden by short-term costs

Investec's H1 '20 (to Sep '19) pre-close guidance was disappointing but reflected challenging conditions for earnings growth. Despite adjustments for restructuring items, management expects lower adjusted EPS y/y in H1 '20 (-4% to -7%) due to muted investment banking and trading revenues in the UK bank. However, the pre-close guidance showed positive trends in annuity revenue streams. UK advances growth (11.5% y/y) and Asset Management net flows (GBP3.3bn in five months) were ahead of our expectations. Management also expects operating costs to decline y/y which is encouraging. We expect ...

September 25, 2019 September 25, 2019 15 EN

Tiger Brands | ESG | Pressed to execute

TBS receives a corporate governance score of 3.37 out of 5 (FY '18: 3.42) and is rated as â€˜good'. TBS receives an ESG risk score of 2.6 (FY '18: 2.6) which we consider moderate. As in FY '18, there were various changes to the Board which raises corporate governance concerns surrounding succession planning and the execution of strategies. Post year-end, L Mac Dougall retired as CEO of the Group. N Doyle has become the new CEO of the Group as of 1 Feb '20. We note the corporate governance concerns around the appointment of N Doyle given that he left the Group at an important juncture in FY...

February 7, 2020 February 7, 2020 15 EN

Ayan Ghosh

Ayan Ghosh

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

From an SA asset-allocation perspective, SA Bonds (ALBI +1.2%) outperformed cash (STEFI +0.6%) and equities (Capped SWIX -2.6%) in Jan â€˜20. The ZAR was the worst performing EM currency in Jan â€˜20, depreciating by 6.8% against the USD, as EM risk appetite declined, with the Coronavirus spreading further than the Sars virus, which began in 2002, likely to hit global growth. Our discussions with various corporates in China suggest that the Coronavirus will peak over the coming weeks and could take until Mar '20 to resolve. In USDs, MSCI SA (-8.8%) underperformed MSCI EM (-4.7%) in 2020, as ...

February 5, 2020 February 5, 2020 9 EN

Harry Botha

Harry Botha

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

Challenging SA economic conditions bring SA REITs credit health and banks' lending to the sector into the spotlight. Our analysis in this report provides greater detail on SA banks' exposure to commercial property and listed REITs. Our stress tests highlight that SA banks' lending to listed REITs (exposed to SA or offshore operations) has been conservative to date. REITs' equity capital and diversified portfolios support the property companies' credit health. While SA banks' near-term earnings growth prospects are geared to SA economic conditions, we highlight that valuations are undemandin...

January 28, 2020 January 28, 2020 36 EN

Sign-up for free to access full reports immediately

Email Address*

Choose Password* ( 6 or more characters )

Due to regulatory restrictions regarding the distribution of financial research, this report is restricted to a specific region or investor type. Get access to exclusive reports by answering the questions below.

Select your country*

Get financial insights straight to your inbox

By clicking "register" you accept the Terms and Conditions & Privacy Policy

Already on ResearchPool?

Almost there...

Are you a professional investor?

Select your country

REGISTER

Create a free ResearchPool account to access full reports, get a personalised dashboard and follow providers or companies

In order to access this report please create an account.

LOGIN

Investec | Charting a more profitable course - *Forecasts updated

Investec | Seeing opportunity

Investec | Banking on progress

Investec | Value hidden by short-term costs

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

Create a free ResearchPool account to access full reports, get a personalised dashboard and follow providers or companies

Sign-up for free to access full reports immediately

ResearchPool Subscriptions

Get the most out of your insights

Why subscribe?

How to subscribe

ResearchPool Subscriptions

This report is only available to subscribers

Why subscribe?

How to subscribe