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Online Share Trading

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CPI

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Mol
Frequent Contributor
What makes a share just go up and up. Is Capitec really worth R528 with a div of only over 1%
6 REPLIES 6
SimonPB
Valued Contributor
Gert15
Contributor
Simon, what is your view on a 5 year price for CPI. Surely DY will increase as well?
Harathke
Regular Contributor
Don't forget, Mol, Capitec has been this successful only rolling out only TWO products to its client base (which is starting to approach a quarter of the entire banking market): unsecured loans and transactional banking accounts. Know how they add about 50% to their revenue with little cost implication? They roll-out a third product, say, a credit card or a mortgage. All that falls to the bottom line. Then they roll-out another product, and another etc etc. This is the real Capitec growth story: earning retail client trust, capturing a large market share and leveraging its position without legacy technology to hold it back.
SimonPB
Valued Contributor
what he said ..

CPI is without doubt quality and at R500 odd is fair value, not much quality on the JSE trading at fair value
Siener
Contributor
If u want to talk technical/momentum trading that's a different discussion, and I'd probably agree with you. However, fundamental picture might be different, which is important for longer term investors.
Siener
Contributor
So Capitec's share price is plunging. This is what I meant by quality of earnings. Capitec's share price has been extremely volatile compared to the big four banks, both up and down. This reflects the inherent risk in their business model. In good times, the share price can shoot up, but now, with threat of legislation that will enforce lower maximum interest rates, their biz model looks shaky. They still make bulk of profits from high (>30% rates) loans, and new limit is gonna be about 24% - massive impact om margins. So when I value a company, I'd demand a much lower PE multiple for Capitec, based on their higher risk profile (vs bank with mortgage loans).