BROKERS’ NOTES: Buy AdvTech, sell Anglo American

Willem Oldewage, senior analyst: Nitrogen Fund Managers

Buy: AdvTech

AdvTech is a leading player in South Africa’s education sector, with a diversified portfolio spanning private schools, recruitment and tertiary education. The company’s first-half trading statement for 2024 showed an impressive 16% growth, highlighting its strong operational performance. AdvTech has been a consistent performer over the past decade, steadily increasing its revenue and expanding its market presence. As economic growth is expected due to the evolving political landscape, AdvTech is well positioned to capitalise on increasing demand for quality education and professional recruitment services. Strategic expansions and disciplined cost management, particularly in its recruitment and tertiary education divisions, serve as key growth levers. With a solid track record of delivering regular dividends and maintaining a robust market position, AdvTech offers compelling long-term value for investors, making it a suitable addition to any diversified portfolio.

Sell: Anglo American

Anglo American faces significant headwinds. The company is heavily exposed to the global and Chinese economic slowdown, with key restructuring efforts under way in underperforming divisions such as De Beers and Anglo American Platinum. Anglo is also transitioning to a more focused business model, centred on copper, iron ore and crop nutrients, but this restructuring will take time to materialise fully. Furthermore, Anglo is investing substantial capital in its crop nutrients business; investors have yet to see any meaningful return on this investment. Thanks to declining commodity prices in its core businesses, escalating production costs and operational inefficiencies, the company’s ability to deliver sustainable returns is in question. Given these uncertainties, Anglo’s long-term investment case remains weak, making it a less favourable investment at this time.