Metropolitan Momentum price reversal off support post interim results release

Key takeaways:

1. Strong Financial Performance: Momentum Metropolitan Holdings Limited reported a solid financial performance for the six-month period ending 31 December 2023, with notable increases in earnings, headline earnings, and operating profit.
2. Dividend Declaration and Share Buyback Programme: Momentum Metropolitan declared an interim dividend of 60 cents per share, indicating a payout ratio of 36% of normalised headline earnings. Furthermore, the Group continued its share buyback programme.
3. New Business Growth Despite Challenges: The Group recorded an 18% increase in the present value of new business premiums (PVNBP) despite a challenging economic environment. However, the value of new business (VNB) saw a decline, prompting a strategic focus on optimizing the sales mix and market share gains to improve future outcomes.
4. Strategic Focus and Future Orientation: Facing ongoing economic pressures in South Africa, Momentum Metropolitan remains focused on growth, efficiency, and adapting to client needs. With an ongoing evaluation of strategies beyond fiscal 2024, the Group is proactive in addressing future challenges and opportunities, aiming for sustained profitability and market competitiveness.

Interim results in brief

Momentum Metropolitan Holdings Limited unaudited interim results for the half-year ending 31 December 2023, showcased significant financial growth and strategic progress.

The company reported a 6% increase in earnings reaching R2,210 million, with headline earnings soaring by 42% to R2,210 million, driven by a solid operational performance across its business units. Notable was the 69% surge in operating profit to R2,025 million, attributed to improved investment income and favorable market conditions. The introduction of the IFRS 17 accounting standard and internal segment restructuring further refined the reporting clarity.

Despite a challenging economic backdrop, the Group declared a 20% increased interim dividend of 60 cents per share, reflecting strong financial health and confidence in sustained profitability. Additionally, an ongoing share buyback program underscores the Group's robust capital and liquidity position.

Looking forward, despite concerns about slow economic growth and market pressures, Momentum Metropolitan is focused on growth and operational optimization, with strategic plans extending beyond fiscal 2024 to adapt to evolving client needs and market dynamics.

Technical analysis view

The share price of Momentum Metropolitan currently trades within a short-term range. We are currently seeing a bullish price reversal forming off of the support of the range at 2000. Confirmation of the reversal suggests a move higher towards range resistance at around 2150. Should the price instead move to close below the 1970 support level, the bullish price reversal would be deemed to have failed.