Capitec shares rose to close at a new high of R214,76 yesterday. The bank also recently announced a dividend of 300c per share, showing why it isn’t surprising that analysts have happily placed “buy” recommendations on the stock.

Matching their overall growth strategy, Capitec has said it plans to open 200 more branches by 2015.

Imara SP Reid analyst, Steve Meintjes, was one of many who had a “buy” recommendation on Capitec:

I don’t think it [the share price] has reached the ceiling. It might be in the short term. The bank is expanding the number of branches and, for the time being, there’s no bubble in unsecured credit.

Avior Research analyst, Harry Botha, said his 12-month price target was R258. Harry also has a “buy” recommendation on the stock:

I think the growth will continue for the next two years. I also don’t think there’s a bubble in unsecured lending. Capitec continues to write high quality business and they have managed to contain the costs.

I don’t think it is expensive. I think they are still growing market share.

The numbers look good:

Capitec’s loan revenue rose 49 per cent to R5,7 billion. The net loan impairment expense to loan revenue was 28,3% in the year to the end of February, compared with 26% in the previous year.

Capitec’s headline earnings rose 68% to R1,1 billion for the year ended in February. The total dividend was up 47% to 425c per share after the bank declared a final dividend of 300c, up 46%.

The cost to income ratio from banking activities is 44%, improving from 48% in the previous year.

The National Credit Regulator said unsecured credit lending – excluding credit card facilities – granted during the year to September rose by 56%.

Capitec also noted in its results presentation at the end of last month that the unsecured credit market in the country was showing continued growth, and they were hoping to take advantage of their positive market position.

[Source: BusinessDay]