Our opinion on the current state of INVLTD(INL)Investec (INL) operates as a specialist bank and asset manager in South Africa, Australia, Europe, the UK, and several other countries. Over the past four years, Investec shares have faced pressure due to Brexit in the UK. However, the decision to separately list its asset management division as Ninety-One has unlocked shareholder value, which is becoming more evident as the pandemic is brought under control. One of Ninety-One’s major challenges has been to convince investors of its international asset management capabilities, beyond being seen as primarily a South African play.
Investec is targeting high-net-worth clients with annual incomes of at least GBP300,000 and assets of at least GBP3 million. The company currently has about 6,000 such clients and aims to grow this to 9,000. Investec distributed 15% of its shares in Ninety-One to shareholders and retained 10%.
In its results for the year ending 31st March 2024, Investec reported a 13.4% increase in adjusted earnings per share (EPS) and revenue of GBP2.09 billion, up from GBP1.99 billion. Assets under management (AUM) grew by 5.5% to GBP20.9 billion, and the company repurchased R6.8 billion worth of its own shares on the market.
In a trading statement for the six months to 30th September 2024, Investec estimated that headline earnings per share (HEPS) would range between 1.4% lower and 3.5% higher than the previous period. The company stated that the prior period's results were positively impacted by the net gain from the UK Wealth & Investment combination with Rathbones, which was partially offset by the effects of Burstone's deconsolidation and the amortisation of intangible assets related to the Rathbones combination in the current period.
Technically, Investec shares are in a strong upward trend, which is expected to continue. Trading at a price-to-earnings (P/E) ratio of 7.72 and offering a dividend yield (DY) of 4.81%, the share is considered under-valued among blue-chip companies listed on the JSE. It is expected to continue performing well going forward.
