Meteoric rise in Investec share price raises conce
Meteoric rise in Investec share price raises concern
--------------------------------------------------------------------------------
Bank dismisses speculation over leak`
Financial Services Editor
A METEORIC rise in Investec`s share price over the past few weeks has some analysts questioning whether news that the banking group was set to deliver a strong rise in profit was already known to some in the market.
The group said yesterday that results for the six months to September would be 20%- 30% higher than for the same period last year. Although a trading update in September for the first five months of its financial year was positive, it had not pointed to such a dramatic rise in headline earnings a share, one analyst said.
`There is little doubt that the market had been expecting less than what has now been indicated,` the analyst said. `We revised our guidance downwards after the (September) trading statement.`
He said it was clear that the latest information had been in the market for the past two to three weeks. `You just need to look at the share price and you can see that this information has been out there,` he said.
Investec shares rose 26% between October 18 and yesterday, when the stock closed at R156,99. By comparison, the banks index increased only 8,5%.
Another analyst said yesterday`s update came as a surprise. `This seems to be out of line with the message that management left us with in September,` he said.
Although Investec painted a positive picture of most of its operations, the analyst said 20% 30% was `a significant increase` on last year`s numbers.
He said Investec`s shares had started to outperform the banks sector on October 18 for the first time in about two years.
`It`s strange that it happens just three weeks before what appears to be a significant update,` he said.
Ursula Munitich, head of investor relations at Investec, said there was no possibility the information had been leaked to the market as preliminary figures had been finalised with the group`s auditors only early this week.
`We certainly thought we gave an upbeat statement in September, and we will outline the areas where we have performed well when we release the results,` Munitich said.
`Perhaps we are playing catchup with the other South African banks,` she said. `When they had their huge run, our share price did not move. We are coming back in line with that.`
Year to date, Investec shares are only 17% higher, while the banks index has soared more than 40%.
One analyst said he would be interested to see whether the rise was sustainable, as profits from investment banks were often `lumpy`.
`We know they were busy with the Nail (New Africa Investments Limited) and AMB Holdings deals in the second half of last year and did not recognise all of the profit then,` he said. `I don`t know if that would have been significant enough to make this impact.`
Although no further details were given in yesterday`s update, in September the group said it was benefiting from the most benign banking conditions in years and was on track to grow its lending activities in the UK, Australia and SA.
Investec`s half-year results are due for release on November 25.
Profile Group (Pty) Ltd. has taken care in preparing all information on this website, but does not accept any liability for errors or out-of-date information.
