Capitec share price interim results and trading view

Capitec Holdings share price: 1H22 results update and trading view

In the below article we summarize interim results from Capitec Holdings and take a look at how the share price is reacting to the news.

Capitec Holdings results

Capitec results showed a surge in group profit which was not unexpected, in lieu of a severely (Covid & lockdown) disrupted comparative interim period and the preceding trading statement guidance.

Highlights of the Capitec results are as follows:

• Headline earnings per share increased by 513%

• Operating profit before tax increased by 837%

• Earnings per share increased by 531%

• An interim dividend of 1 200 cents per share was declared

• Return on equity: 27%

• Retail bank clients using digital channels: 8.9 million

• Active Capitec Funeral Plan policies: 1.5 million

• Active clients: 16.8 million

Comments on results:

Capitec’s net income over the reporting period has benefitted from a sharp (33%) increase in transactional income, although the most substantial benefit thereto has been a 66% (vs 1H21) drop in credit impairments.

Transactions for the group have risen along with easing lockdown restrictions, supported by a positive digital user journey which saw a 22% increase in active digital clients, and a more than 100% increase in online shopping.

The groups credit book performance has seen an improvement in client arrears and benefitted from Capitec’s client relief payment plan. Impairment charges are back at pre-Covid levels for the group and total provision thereto is 26.5% of total gross loans and advancements.

A R12 per share dividend has been reinstated which was ahead of estimates.

Capitec Holdings: technical analysis

The share price of Capitec has moved sharply lower to test support of the range (shaded) within which it has been trading over the last month or so. Range support is considered at 1815. A break below this level would call for a short term correction of the longer term uptrend.

Should a correction ensue, a confluence of both horizontal and trend line support at 1725 provides us with an initial downside target. Traders respecting the longer term uptrend might hope to find long entry into a correction rather than looking to short the move. Only if a correction was to take the price below trend line support would the long bias assumption be reconsidered.

In Summary:

• Interim HEPS up 513% (vs 1H20)

• Transactional income increased by 33% supported by the digital user journey

• A 66% drop in credit impairments was the most accretive to the gain in Capitec’s net income growth

• A R12 per share dividend has been reinstated

• The share price of Capitec could be starting a short term correction of the longer term uptrend