Back in our target range
RECENTLY, we suggested investors watch African Bank Investments Limited (Abil) for a drop beneath the R30 mark as an opportunity to buy, which has now happend.
The short-term sell-off appears to be partially driven by a downgrade from ratings agency Moody’s, which may have seen the group being sold down by some foreign investors who are mandated to hold certain grades of company. However, as Abil CEO Leon Kirkinis points out, Abil maintains a global investment grade rating, and the outlook from the agencies remains “stable”, which suggests that it’s still comfortable with the operational risk at the lender. Asset managers like Anchor Capital and Vestact continue to hold the share, and if it is good enough for them, then it is probably good enough for mere mortals.
For those with a higher-risk profile, you could consider some leverage from these levels as it seems to have developed a significant margin of safety. Watch your stop-losses but for now down-side risk seems limited.