Investec Share Discussion Threads

[bamboo2] 15/5/2014 09:01

Cheers OXMAN. Are you into agriculture?

This chart shows the massive, complex inverse head and shoulders, I'm hoping will play out.

[its the oxman] 15/5/2014 08:36

Interesting posts. Cheers Bamboo. Shares looks intent to keep creeping up.

[bamboo2] 14/5/2014 21:55

Moneyweb News

Author: Hanna Barry|

13 May 2014 23:19

The rise of Investec's share price
A picture paints a thousand words.

Financial services are the flavour of the month for investors and a quick analysis shows that the normal suspects are not on top of the performance chart.

After its business was knocked by exposure to developed market upheaval in the wake of the subprime crisis, Investec's share price took a beating. In the last two years, however, the private bank's share price growth has outperformed each of South Africa's major banks.

Investec's share price growth over a period of five years is far less impressive and more in line with its banking counterparts, reflecting slow recovery from difficult operating conditions and poor fundamentals within the business. Over this time period, Capitec is the stand-out performer.

Paid to perform

Brad Preston, portfolio manager at Mergence Investment Managers, said that a rerating relative to the other banks has largely driven Investec's outperformance over the past two years.

"Investec was very cheap in 2012, trading at below 0.9x book value. At the same time the average price-to-book ratio for the 'Big Four' South African banks was above 1.8x," Preston explained.

The price-to-book ratio compares a stock's market value with its book value. In other words, the price at which Investec was being traded in the market (its market capitalisation), was in fact less than the company was worth on its books (total assets minus total liabilities).

If a stock is trading at a price-to-book ratio below one then it means that the company's market cap is below its book value.

"Banks may trade at a discount to book value when the market is concerned that the assets may need to be impaired in future, which could reduce the book value, as has happened with African Bank," Preston said.

Tracy Brodziak, analyst at Old Mutual Equities, said that from 2007 to 2012 Investec's share was a "horrendous performer". Its exposure to developed markets and Irish property (through Kensington) meant bad debt in the wake of the subprime crisis and underperforming earnings.

"As management has taken actions to exit underperforming businesses and as impairments in the specialist bank improved, the stock has rerated strongly and is now trading closer to 1.4x book," Preston commented.

Investec sold its professional finance and asset finance and leasing businesses in Australia to the Bank of Queensland in April for R4.3 billion. It is looking to sell its UK intermediary mortgage business Kensington and has been approached by interested parties.

"An improvement in earnings has driven the share, which has tracked earnings performance," Brodziak confirmed, noting that Investec has grown its asset management and wealth management businesses.

Preston said the market seemed more willing to place a higher multiple on these businesses than before, valuing the asset management business of Investec and the banking business separately. "In 2012, the market seemed to place a discount on these businesses due to their inclusion within the banking group," he noted.

He said the weak rand would have offered some assistance to Investec's share price, but probably hampered the performance of local banks, given the potential result of increased inflation, local rate hikes and bad debts.

Brodziak said Investec hadn't outperformed the other local banks over a five-year period because it came from such a low base.

She said a growth in customer numbers and transactional banking grew Capitec's share price, but that the market had been concerned about its unsecured lending exposure. "Its fundamentals are strong and it could take more market share from the other banks," she said.

[bamboo2] 08/5/2014 08:20

"...Jones adds the decision to move Professional Mortgages to the private bank is not to do with parent company Investec's decision to sell its specialist lending brand Kensington Mortgages.

He says: "It isn't in any way linked to the sale of Kensington Mortgages, it is a more strategic decision..."

=========================================================================

Okay, just to be clear this has NOTHING to do with Kensington.

[bamboo2] 07/5/2014 09:14

hxxp://www.moneyweb.co.za/moneyweb-investment-insights/peter-armitage-on-buying-quality-businesses-alexan

PETER ARMITAGE:...And Investec, my old home...a great business which was dogged down by some poor parts and Australia who have given up their banking licence and it had become evident that the attractive parts of the business would emerge and they were going to shed themselves of the low return activities. So there in that share, we've made over 20% in the last month or two. Those are the kinds of opportunities one's got to find in a market that's generally at least fully priced.

HILTON TARRANT: Let's stick with Investec Peter, what is the attraction there? As you say the parts that were perhaps dragging it down have largely been shed...is there a lot more to come from this business?

PETER ARMITAGE: Ja Investec had about roughly 15% of its equity capital sitting in an Australian bank earning nothing. They were making losses...so they've given up that banking licence and can bring the capital back. And then Kensington in the UK was the other big one which was their kind of sub-prime lending book which they haven't got rid of yet but the bids are out there. Now within Investec you've got a fantastic asset management business and we've seen the kind of value that people are prepared to put on the likes of Coronation, and that is kind of hidden by the poor parts of the business, and getting back to kind of core private banking and investment banking for Investec which is what they're really good at. If you look at Investec over the last 20 years, they've had forays into America and Israel and Australia and those typically haven't worked out...they've done fairly in the UK and very well in South Africa. In South Africa they've had issues through 2008 but I think the management have sorted that out. So you're going to have a much cleaner business and a business which we think can earn higher returns in South Africa than other banks and pretty high returns in the UK relative to the UK banks.

[bamboo2] 29/4/2014 17:02

volume recovering

[bamboo2] 29/4/2014 13:44

The question is how much will it go for, and how much is already in the sp?

[bamboo2] 29/4/2014 13:40

Oxy, Kensington sale potential is hardly a secret!
There must be a few different co's looking at it, so likelihood of info on a deal leaking is highly probable, given that the kind of co buying Kensington will come from the financial sector.
Hard to believe there are so few pi's taking an interest.

550 looks a cert, thinking of adding again

[its the oxman] 29/4/2014 12:47

Any ideas what. Hoping for a push toward 550p level.

[bamboo2] 28/4/2014 11:40

Volume seems to have dried up here, everyone holding tight. Something going on in the background?

[bamboo2] 26/4/2014 19:36

Weekly chart,

[bamboo2] 20/4/2014 13:19

Reading that the co. figures have been impacted by the exchange rate, I have produced a chart, to try to illustrate the correlation with the share price

[bamboo2] 19/4/2014 22:42

Investec paid a lowball £283m for Kensington in May 2007. Now estimated to be generating about £35m/yr in profit, anyone any guesses as to the price?

Source,


There is talk of numerous interested parties, from Goldmans to Virgin to Metro Bank, and others, so likely to be at a premium.

Anyone more familiar with Investec have an opinion? Or is this potential already in the sp?

[bamboo2] 17/4/2014 09:37

Got my timing right for once, by the looks of things. Needs to close above 500.

Now, lets get some news about Kensington.

[bamboo2] 15/4/2014 22:40

INVESTEC expects to repatriate more than $600m to the UK after the sale of its Australian assets to the Bank of Queensland and the restructuring of the operations in that country, CEO Stephen Koseff said in an interview on Friday.

The sale and restructuring of the businesses means Investec will no longer have banking operations in Australia. Investec will use the $600m to grow the UK business, but no acquisitions are planned at this stage.

The Bank of Queensland announced on Friday morning it was buying Investec's Australian professional finance, asset finance and leasing businesses, including its high-net-worth customer deposit book for $440m.

Mr Koseff said the business was being sold at a premium of $210m to its tangible net asset value. More than 310 employees would be transferred to the Bank of Queensland.

"We will get just over $600m from Australia ," Mr Koseff said "Most of it will go back to London.

"We will no longer have a bank in Australia. We won't have a banking licence, but we will continue to have a securities and advisory licence ."

A Johannesburg-based analyst said he did not think anyone was expecting a special dividend from the sale. But he noted that as banks continued to restructure and sell some of their assets this released a lot of capital that was hard to deploy. If this happened, then the institutions would be left with no choice but to give it back to shareholders.

Investec wants to transform its Australian banking business into a boutique operation that is focused on corporate advisory, property funds, aviation, project finance, financial markets, acquisitions and commodity and resource finance. Corporate banking in Australia will be offered through the British business.

[bamboo2] 15/4/2014 09:15

Added at last.

[bamboo2] 12/4/2014 10:16

Potentially 495 looks like good point to add.

Has lost sideways range. Still waiting to add.

[bamboo2] 12/4/2014 09:37

Investec has announced the sale of its Australian business to the Bank of Queensland for A$210m (£117m), a move which brokers predict could boost its UK wealth management arm.

Numis Securities says the sale is twice the book value of the Australian business and will boost Investec's equity tier 1 ratio by 11.5 per cent to 10.6 per cent.

In February, Investec announced it was looking at the potential sale of its mortgage arm Kensington Mortgages.

Numis suggest the improved capital ratio offered by the sale of Investec's Australian business means the Kensington disposal will lead to the generation of surplus capital.

A Numis note says: "Investec will look to invest this capital in growing its business. Looking forwards we see a combination of a higher ROE with a stronger capital base. With significant demand for bank assets we expect the sale of Kensington to potentially materially boost Investec's core capital."

The note goes on to say Numis would like to see more capital allocated to Investec's wealth business, which saw net inflows of £1bn in the six months to the end of 2013.

"We believe the 35 per cent increase in profitability in the first half of the year (by far the best performance of any UK wealth manager of any note over the period) is the beginning not the end," the broker adds.

"We would like to see more capital allocated to this very high value division and the disposal of Kensington could provide it."

[bamboo2] 11/4/2014 08:45

Disposal.

Bank of Queensland has launched a $400 million acquisition offer of Investec Australia's specialist finance and leasing business.

The bank is in a trading halt following the announcement until April 16.

In a statement to the ASX, BoQ said it had launched an entitlement offer for the $2.4 billion loan portfolio, which includes Investec's asset finance and leasing business.

"The acquisition provides BOQ with an opportunity to obtain a leading position in attractive specialist segments, delivering access to a client base consisting primarily of medical, dental and accounting professionals," BoQ chief executive Stuart Grimshaw said.



"It also materially increases the size and footprint of our Business Bank, providing further diversification by geography and industry sector.

It comes as BoQ reports a surge in cash earnings for the six months to February, despite strong competition and subdued growth in retail lending. Investec said following the sale it would cease to be an authorised deposit-taking institution, but would retain a ''significant business in Australia'' focusing on corporate banking and property funds management.

The $2.4 billion professional finance portfolio includes its deposits, asset finance and lending businesses. It will expand the regional lender's reach outside of its home state.

Bank of Queensland reported a net profit of $134.7 million – up 34 per cent from a year earlier.

Cash earnings rose 17 per cent to $140.2 million, a record half-year result for the bank.

Retail lending remained flat over the half as the bank ''chose to focus on quality and risk in a market where competitors are discounting heavily to achieve growth''.

Meanwhile, Mr Grimshaw said he expected to see a return to more normal house price growth but warned policy changes would be ''critical'' in improving the bank's outlook.

''With the likelihood of a return to a more normal trend in house price growth, we expect business credit growth will be the main driver behind future credit growth,'' he said.

''However, there is a sense that micro-economic reform will be critical in providing further impetus to the economy.''

The bank issued an interim dividend of 32¢ a share, fully franked – up 4¢ from a year earlier.

Investec said the professional finance business was being sold as a going concern with more than 310 workers transferring to BOQ.

"The agreement with BOQ represents a significant opportunity for both the Professional Finance and Asset Finance & Leasing businesses as they pursue their next phase of growth," chief executive Ciaran Whelan.

"We are in a good position to concentrate on what we do best within our specialist niches and to demonstrate our distinctive approach."


Read more: hxxp://www.smh.com.au/business/banking-and-finance/bank-of-queensland-to-buy-investec-units-as-profit-surges-20140411-36h0l.html#ixzz2yYsdxUH3

[bamboo2] 08/4/2014 17:14

Wait if planning to add imo
update



Squeeze is on. Looks like this could pop to the upside.

[bamboo2] 04/4/2014 22:05

hi OXMAN, It's good to clear the 500 hurdle at the end of the week, makes our weekly chart look strong.
Next week, a small pull back to re-test 500 may be in order, but this could be an intraday phenomenon.
Then it's a case of onwards and upwards. Targets in earlier post.
Now we've come this far and cleared the neckline of the long term inverse head and shoulders, it could be a good time to ADD, subject to a successful retest.

I'll have a look at chart timescales over the weekend
[edit, top target is 700 by the beginning of 2015.]

when is the next set of results due?

[its the oxman] 04/4/2014 16:11

Through 500p. Next targets please. Financials generally doing well this past week. Next set of results will hopefully set this on fire and send it towards 600p.