Globally, investor sentiment is at a low, investors on the JSE are no different. They are faced with the same issues and risks as global investors but with the added risks locally.
It's not easy being optimistic enough to deploy additional capital but you can stack the odds in your favour by slowly deploying capital into the many JSE “bargains” that periods of sustained pessimism bring. Bargains are stocks trading at discounts to historical averages, but you want to invest in the ones that have reached a turning point. Nobody wants to try catch a falling knife.
Last week one such bargain reached a turning point, Sasfin released full year results that signify the years of poor share price performance is overdone. Headline earnings have increased over 31% putting it on a PE of 6. Historically its PE has averaged a little over 9. So, its share price would need to rise to R45 to trade at historical PE levels. And its Net Asset Value has remained static just below R50 per share for a few years now.
The turn around in fortunes for Sasfin comes from its strategy of providing more solutions to its customers. It has embraced technology and rolling out digital platforms that cater for sophisticated clients in the digital age. It is pushing out its digital banking platform with a drive for small and medium businesses. Sasfin own a stake in DMA (previously Saxo South Africa), bought out the first Self Invested pension provider in South Africa called SIPP and own stakes in fintech businesses Payabil, Pay@ and Hello Paisa. Sasfin is embracing innovation and moving away from the boring image it has towards a tech savvy bank that could disrupt the traditional banks left behind.
Sasfin doesn't trade a lot of shares every day but you will be able to get in and out.
Buy Sasfin below R30.00 for a move to R45 in the next 18 months.
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The week ahead:
• Local: PPI (26/09)
• Local Results Due: ACE, CPI, SUR, BLU (26/09), RLF, WEZ, OMN, ERPS (27/09)
• EX-Div (25/09): ACG, ADH, ARI, ASR, BEL, BID, CSB, DRD, FFA, FFB, FSR, IMRPA4, IPL, MTM, RMH, TRL.
Other Economic data releases of interest…
• Monday: Industrial Production (CNY)
• Tuesday: BOJ Gov Kuroda speaks (JPN), CB Consumer Confidence (USA)
• Wednesday: Crude Oil Inventories (USA)
• Thursday: ECB President Draghi speaks (EU); BOE Gov Carney Speaks (UK); FOMC Press Conference (USA)
• Friday: Core durable goods orders, Personal Spending (USA)
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