Avior Capital Markets - Investec Limited (101G) Investec | Changing its stripes

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Avior Capital Markets

Harry Botha

Investec | Changing its stripes

Investec's Specialist Banking operations have delivered subpar returns over the last ten years. The average ROE for the Group excluding Asset Management has been 7.4% since FY '11. However, the proposed unbundling of most of Investec's stake in IAM (we expect 60%) has forced the Group to become more disciplined on costs and capital efficiency. The updated Group ROE target range of 12% to 16% excluding Asset Management (from FY â€˜22f) exceeded our expectations (previously 11.8% by FY '22f). Considering that the improvements relate to cost efficiency (particularly in the UK operations) while keeping the current asset and revenue growth trajectory, the targets are achievable in our view. We believe Investec's share price remains undervalued. We expect higher levels of profitability to support the share's rating.

01/03/2019 14 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 | Changing its stripes

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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