Avior Capital Markets - Investec Limited (101G) Investec | Built-in resilience

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Avior Capital Markets

Harry Botha

Investec | Built-in resilience

We believe Investec's operational performance in FY '20f reflects resilient trends, as economic conditions constrain growth in SA while Investec's profitability in the UK Specialist Bank continues to improve (as the private bank gains scale). In our view, Investec's conservative liquidity and leverage, and client quality is underappreciated in current conditions. The share price has followed a similar trend to our weighted average peer group since Investec's FY '19 results (-9%), as equally weighted return indices for our samples of SA and UK banks have declined 14% and 21%, respectively. Despite the external factors, we believe Investec's share price is undervalued due to the resilient nature of the business and the improving profitability profile. Management's focus on improved profitability following the Investec Asset Management (IAM) demerger continues to underpin the investment case for the stock. Please find our analysis and updated forecasts in this note.

30/08/2019 17 EN

Underlying

Investec Limited

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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.

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Analysts

Harry Botha

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Investec | Built-in resilience

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

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