Results impress, but approach with caution
Capitec released its interim results at the end of September, ahead of consensus expectations, and reported a 20% surge in headline earnings and headline earnings per share (HEPS).
The bank continued to grow its client base, with a 15% increase in active clients (about 109 000) – thereby achieving its 10.5m objective. An interim dividend of 630c/share, a 20% increase, was declared.
It also reported that net income from transaction fees were up 32% to R3.1bn.
These results saw Capitec retain key support at 90 815c/share and jump to its major resistance level at 103 500c/share (as mentioned in my article on Capitec in the 27 September edition of finweek). A move through the level of 103 500c (a weekly close above that level) could see Capitec retest its all-time high at 110 000c/share. Capitec would have to breach its all-time high to embark on a new bull phase.
Otherwise, it could consolidate, with potential to top-out – hence my cautious stance.
How to trade it:
If Capitec forms a lower top below 110 000c/ share, it could return to support at 90 815c/ share – and possibly fall further to 81 100c/ share. Downside through 100 000c/share could trigger a sell-off towards 90 815c/share. My cautious view on Capitec would only change on upside through 110 000c/share. In this instance, the bank could surge to new highs targeting 140 000c/share. ■ email@example.com