AFRICAN RAIN­BOW MIN­ER­ALS

Finweek English Edition - - INVESTMENT -

BUY

Bro­ker­age Imara SP Reid con­tin­ues to see good growth op­por­tu­ni­ties for this JSE-listed re­source player. This fol l ows t he re­lease of i nterim re­sults, which saw head­line earn­ings come in 30% lower than in the pre­vi­ous year. An­a­lyst Steve Mein­t­jes told clients: “The com­pany’s growth strat­egy com­prises strong con­tin­ued growth of the ex­ist­ing as­sets and a new min­er­als growth strateg y to de­velop an ex­panded, di­ver­sif ied port­fo­lio of new mine devel­op­ment op­por­tu­ni­ties.” This thrust is headed by a sep­a­rate di­vi­sion un­der the lead­er­ship of veteran former CEO An­dré Wilkens as well as Jan Steenkamp, who is fo­cus­ing on ex­plo­ration. It is also tasked with eval­u­at­ing merg­ers and ac­qui­si­tions. This bodes well for con­tin­ued healthy growth in the long term. Given re­cent price ac­tion we re­view our rec­om­men­da­tion from ‘Buy’ to ‘Add’.” price tar­get from R32 to R33. In a note to clients, SBG wrote: “To be fair, we think the sec­tor as a whole is over­val­ued (with maybe t he no­table ex­cep­tion of Ned­bank in which we still see some sl i ght value) and so our ‘ Sell ’ rec­om­men­da­tion i s more ref l ec­tive of a cau­tious sec­tor view rather than any FirstRand specif ic is­sues. Hav­ing un­der­per­formed all its peers in the past quar­ter (+4% ver­sus 7%-15% for the rest of the Big 4), we cur­rently see lit­tle to choose be­tween FirstRand and Stan­dard Bank as our sec­ond pre­ferred of the Big 4.”

SELL model port­fo­lio and we be­lieve that they rep­re­sent the best of the South African re­tail sec­tor. While their share prices may have come off the boil in re­cent times, the strong un­der­ly­ing fun­da­men­tals should en­sure that their longer-term prospects re­main in­tact.”

HOLD

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