The Investment Column: Sleeping giant Investec can carry on winning friends despite uncertainty
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Since listing on the London Stock Exchange two years ago, Investec has been one of the sleeping giants of the FTSE 350. Although it is one of the largest UK-listed financial services companies, trading in the stock has been minimal and - until six months ago - its share price has been reluctant to reflect any improvement in the underlying business.
Since listing on the London Stock Exchange two years ago, Investec has been one of the sleeping giants of the FTSE 350. Although it is one of the largest UK-listed financial services companies, trading in the stock has been minimal and - until six months ago - its share price has been reluctant to reflect any improvement in the underlying business.
Like Old Mutual, much of the market's indifference comes out of the fact that Investec is a large South African company (from where almost two-thirds of its revenues are generated), with much smaller UK and Australian subsidiaries tacked on. As a result, many do not regard Investec as a bona fide UK stock, and are wary of the fact that any investment in the group involves taking a serious bet on the fortunes of the South African rand.
Slowly but surely, however, the group appears to be winning investors round. Since it became involved in the takeover of Rensburg at the end of last year, beefing up its UK presence, its shares have been on the rise. And since this column last advised investors to buy the stock in November, it has risen more than 17 per cent. The shares leapt another 4 per cent yesterday, as the group turned in an impressive set of full-year results, unveiling a 55 per cent rise in pre-tax profits, driven by substantial growth across all areas of the business.
In the UK, its private client and investment banking businesses both have an impressive momentum, while back home the company is cashing in on a lending boom fuelled by the country's lowest interest rates in more than two decades.
With a yield of more than 4 per cent, and trading on less than 10 times next year's anticipated earnings - compared with as much as 20 times for some of its rivals - Investec presents real value for investors now, even in the face of a weakening rand.
Although short-term currency fluctuations and uncertainty in the UK financial markets may hold the stock back, its prospects for the medium to long-term are solid. At 1,642p, we reiterate our buy recommendation.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments