Mark du Toit, portfolio manager at OysterCatcher Investments, on what the smart money is doing
01 August 2024 - 05:00
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Mark du Toit, portfolio manager: OysterCatcher Investments
Buy: Standard Bank (SBK)
South Africa’s GDP is expected to improve on the back of reduced load-shedding and improved rail and port logistics, coupled with improving investor confidence stemming from the government of national unity and continuing policy reforms. Expected interest rate cuts and an improving credit cycle mean additional tailwinds for the South African banking sector. Standard Bank is well placed to benefit because of its large scale in both retail and commercial banking. This will more than offset the effect of translating the earnings from its Africa operations into its rand reporting currency. Steady earnings growth, an improving return on equity plus a 7% dividend yield make Standard Bank an attractive investment.
Sell: Vodacom (VOD)
Telecom businesses are asset heavy and require continual capital investment in their own infrastructure. This, coupled with competitive pressure on pricing, means it is difficult to grow earnings meaningfully over the medium term. The Vodacom share price has rallied recently and there are better returns to be made in other South African listed equities.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
BROKERS’ NOTES: Buy Standard Bank, sell Vodacom
Mark du Toit, portfolio manager at OysterCatcher Investments, on what the smart money is doing
Mark du Toit, portfolio manager: OysterCatcher Investments
Buy: Standard Bank (SBK)
South Africa’s GDP is expected to improve on the back of reduced load-shedding and improved rail and port logistics, coupled with improving investor confidence stemming from the government of national unity and continuing policy reforms. Expected interest rate cuts and an improving credit cycle mean additional tailwinds for the South African banking sector. Standard Bank is well placed to benefit because of its large scale in both retail and commercial banking. This will more than offset the effect of translating the earnings from its Africa operations into its rand reporting currency. Steady earnings growth, an improving return on equity plus a 7% dividend yield make Standard Bank an attractive investment.
Sell: Vodacom (VOD)
Telecom businesses are asset heavy and require continual capital investment in their own infrastructure. This, coupled with competitive pressure on pricing, means it is difficult to grow earnings meaningfully over the medium term. The Vodacom share price has rallied recently and there are better returns to be made in other South African listed equities.
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.