Our opinion on the current state of INL

Investec (INL) does specialist banking and asset management in South Africa, Australia, Europe, the UK, and a few other countries. Brexit in the UK has put pressure on Investec shares over the past 4 years. The decision to separately list its asset management division in the form of Ninety-One has unlocked shareholder value, which is becoming more apparent now that the pandemic is coming under control. The new listing's major challenge has been to convince investors that it is not a South African play but has international asset management capability. The company is going after clients with an annual income of at least GBP300 000 a year and assets of at least GBP3m. So far, they have about 6000 but plan to increase this to 9000. The company distributed 15% of its shares in Ninety One and retained 10%. In its results for the year to 31st March 2023 the company reported operating income up 14% and headline earnings per share (HEPS) up 25,3%. The company said, "Funds under management (FUM) decreased 4.5% to £61.0 billion (FY2022: £63.8 billion) largely reflecting the unfavourable market movements. Net inflows were £377 million, with £810 million inflows in discretionary FUM partly offset by £433 million net outflows in non-discretionary FUM". In an update on the 5 months to 31st August 2023 the company reported the rand fell by 19% against the GBP and the company spent R6,7bn on a share buy back scheme. In the 6 months to 30th September 2023 the company estimated that HEPS will be between 6% and 12% higher. The company said, "Revenue growth was supported by continued success in our client acquisition strategies, a higher interest rate environment and balance sheet growth". Technically the shares are in a strong upward trend which expect to continue. Trading at a P:E of 7,88 and a dividend yield (DY) of 5,09%, we believe that this share is under-valued among blue chip companies trading on the JSE and that it will continue to perform well.