Awaiting a breakout
investment holding company Remgro, chaired by Johann Rupert, is known to be stable with good management, including a proven track record of unlocking shareholder value. It’s invested in companies aligned with good management teams and credible growth projections.
It has an effective interest of 44.6% in Mediclinic International. Other investment holdings include stakes in Rand Merchant Insurance Holdings (RMI), Rand Merchant Bank Holdings (RMB), FirstRand, Grindrod, Distell and RCL Foods.
Outlook: Mediclinic, which is down approximately 52% from its high, has contributed to Remgro’s underperformance over the past few years. Remgro is currently trading in a bear channel, which commenced in 2015, after forming a new high at 28 445c/share.
Remgro has bounced on the lower slope of its bear channel, but is encountering resistance at 21 935c. Currently trading at a 15% discount to intrinsic value, buying a Remgro share means you are buying a basket of aboveaverage quality assets.
On the charts: Confined in a bear channel, Remgro is encountering resistance at 21 935c/share, but is retaining firm support at 19 680c/share. The fact that Remgro is trading at a discount is attractive to investors.
Go long: Remgro would have to trade above 21 935c/share to trigger further gains to either the 23 325c/share level or the upper slope of its bear channel – initiate a neutral long. A positive breakout would only be confirmed above 24 800c/share, potentially prompting a 100% retracement to the all-time high at 28 445c/share – increase long positions. Go short: Remgro would form a lower top if it should fail to trade above 21 935c/share – a bearish sign. Support at 19 680c/share may give in, and the share price could topple to the lower slope of the channel, or the 17 915c/share level. ■ firstname.lastname@example.org
has been rated as one of the top five technical analysts in South Africa. She has been a technical analyst for 10 years, working for BJM, Noah Financial Innovation and for Standard Bank as part of the research team in the Treasury division of CIB.