Re­sults im­press, but ap­proach with cau­tion

Finweek English Edition - - In Brief In The News -

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. ■ ed­i­to­rial@fin­week.co.za

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