Our opinion on the current state of INL

Investec (INL) operates as a specialist banking and asset management firm with a global presence spanning South Africa, Australia, Europe, the UK, and several other countries. Over the past four years, the company has faced pressure on its shares due to the uncertainties surrounding Brexit in the UK. However, Investec's decision to separately list its asset management division as Ninety-One has been instrumental in unlocking shareholder value, a trend that is becoming increasingly apparent as the effects of the pandemic subside.

The separate listing of Ninety-One posed a significant challenge for Investec, particularly in convincing investors of its international asset management capabilities rather than being solely reliant on the South African market. To expand its client base, Investec targets individuals with an annual income of at least GBP300,000 and assets exceeding GBP3 million. Currently, the company has approximately 6000 such clients and aims to increase this number to 9000.

In its latest financial results for the six months ending September 30, 2023, Investec reported a notable increase in headline earnings per share (HEPS) by 15.3%. Additionally, the company raised its credit loss impairment by 57.7% and conducted a share buyback worth R6.8 billion.

In a pre-close update for the fiscal year ending March 31, 2024, Investec projected a further increase in HEPS ranging between 4.8% and 10.6%. The company highlighted that its UK business, including Rathbones Group, is expected to achieve adjusted operating profit growth of at least 15.0% compared to the previous year. Furthermore, the Southern African business anticipates adjusted operating profit to be at least 10.0% higher in Rands compared to the prior year.

From a technical standpoint, Investec's shares are on a strong upward trend, which is anticipated to continue. With a price-to-earnings ratio (P:E) of 7.62 and a dividend yield (DY) of 5.11%, the company appears undervalued among blue-chip companies trading on the JSE. Given these factors, Investec is poised to continue its strong performance in the market.