Capitec surges on foreign demand

Grant

Grant

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HIGH-flying bank Capitec soared to new heights on the JSE on Thursday as foreign buying continued unabated.

"The company is now well on its way to breaking into the JSE’s elite top 40 index," Anchor Capital said in a note.
Inclusion into the top 40 index will provide a further boost for Capitec as many global index funds will then have to include Capitec stock in portfolios.
Capitec reached a high of R544.71 in early morning trade but pulled back later, closing 0.57% up at a record R538.05.

With a market capitalisation of R62.2bn, Capitec is trading at a price:earnings ratio of 24.5 compared with the banking index’s 14.8.

It was the best performing local share last month, climbing 28.1%, and is up 54.4% since the beginning of the year. It has gained 160% over 12 months.

An increase in lending evident in the second half of the year to end-February is also boosting Capitec as analysts say it should support further strong earnings growth of above 20% over the next few years.
Capitec CEO Gerrie Fourie said advances in the second-half period were 7.8% higher at R10.1bn, from the R9.3bn advanced in the first half.

Diluted headline earnings per share were 17.3% higher than in the first half, and 80% up on a year earlier.

Capitec reported normalised headline earnings per share rose 27% to end-February. Capital adequacy remained strong at 36% with the cost:income ratio at a low 35%. The arrears coverage ratio is 196%.
An analyst, not wishing to be named, said Capitec’s earnings growth was not centred only on continued client growth. "It has a lot of fat with provisioning and clearly does not need all of it."
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http://www.bdlive.co.za/business/financial/2015/04/07/capitec-surges-on-foreign-demand
 
This a lot of cash in the developed world that is going into equities at the moment because the very low interest rates in the western economies. In fact some European countries are now charging investors to invest. i.e. negative interest rates. The only thing keeping money in these bond markets is legislation which forces some to hold a certain levels of govt debt.

Its natural that some of this will spill over into developing markets.

We are probably still some way from an equity correction, but keep a watch out for when the UK and EU start increasing interest rates. Thats when equities and developing countries could start taking a hit.
 
Bought shares back in 2007 when they were merely R27. Smiling all the way. Was surprised in 2008 when it broke R120. Was surprised in 2010 when it hit over R200.

Shocked to see it hit over R500.
 
MrR said:
Bought shares back in 2007 when they were merely R27. Smiling all the way. Was surprised in 2008 when it broke R120. Was surprised in 2010 when it hit over R200.

Shocked to see it hit over R500.
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Nice!
 
MrR said:
Bought shares back in 2007 when they were merely R27. Smiling all the way. Was surprised in 2008 when it broke R120. Was surprised in 2010 when it hit over R200.

Shocked to see it hit over R500.
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holy ****, how many shares did you buy? Great decision, btw :D
 
Wall said:
holy ****, how many shares did you buy? Great decision, btw :D
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Initially bought 2000 shares @R27, but built up a portfolio over the years buying and selling, so my average is a lot higher than R27 now. Regardless, my portfolio has grown tenfold over the past few years. My father must be kicking himself; he sold his shares (bought at ~R7 in 2006) when the price hit R350. Still told me that it would platuea and was a good time to sell.

Knew something was up when the former CEO, Riaan Stassen, sold R110m shares last week, but had no idea it would improve the share price this significantly.
 
zippy said:
This a lot of cash in the developed world that is going into equities at the moment because the very low interest rates in the western economies. In fact some European countries are now charging investors to invest. i.e. negative interest rates. The only thing keeping money in these bond markets is legislation which forces some to hold a certain levels of govt debt.

Its natural that some of this will spill over into developing markets.

We are probably still some way from an equity correction, but keep a watch out for when the UK and EU start increasing interest rates. Thats when equities and developing countries could start taking a hit.
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Thats the theory anyway...actually moving money EU > SA is crazy expensive. I've crunched the numbers...even at private banking rates it'll take 5%+ raw gain in a stock to *break even* in non-risk adjusted terms...without even taking tax into account.

FX EU > SA 2% hit
Buy JSE > .75% hit
Sell JSE > 0.5% hit
FX SA > EU 2% hit

Traders rates will obviously be much better...but still its not as cheap as it looks imo.
 
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