CPI trade ideas
Our opinion on the current state of CAPITEC(CPI)Capitec Bank (CPI) is now South Africa's largest bank by customer numbers, with 21.1 million clients. Originally launched by PSG, Capitec has been a major disrupter in the local banking industry, steadily gaining retail market share from traditional banks by offering a simplified, lower-cost solution—particularly targeting the previously unbanked population.
The company continues to expand rapidly, adding approximately 90,000 funeral policies per month. Its annual average HEPS growth of 32.2% per annum since 2003 is an exceptional record, making it a standout performer on the JSE. In our view, Capitec is a "must-have" for any private investor's portfolio.
PSG has unbundled its Capitec holding to unlock shareholder value. However, despite its large customer base, Capitec still holds less than 10% of South Africa’s retail deposit base, as most of its clients are in the lower LSM segments.
On 19th January 2022, Capitec announced a BBBEE transaction, granting about R1 billion worth of shares to long-term employees who had been with the company since early 2019. While this share issuance caused temporary dilution and a decline in share price, it reflects Capitec’s commitment to transformation and employee retention.
Recent Financial Performance
In its results for the six months to 31st August 2024, Capitec reported:
- Operating profit up 41%
- Headline earnings per share (HEPS) up 36%
- Return on equity (ROE) at 29%
- Credit loss ratio at 7.6%
- Value-added services revenue up 79% to R2 billion
The company stated, "In August 2019, our ecosystem comprised mainly Personal Banking (Retail Bank). We had 12.6 million clients and offered the GlobalOne transacting and savings accounts, as well as unsecured term loans, credit cards, and credit facilities. Despite challenges such as COVID-19, the war in Ukraine, instability in the Middle East, and poor global and South African macroeconomic conditions, we have grown our active client base to 23.2 million and have built an enhanced ecosystem."
Future Outlook
In a trading statement for the year to 28th February 2025, Capitec estimates that HEPS will increase between 28% and 32%. The company attributes this to "the improvement in the credit impairment charge and credit loss ratios (CLRs) seen in the second half of the 2024 financial year, which has continued into the 2025 financial year."
Technical Analysis
The share has been rising steadily since June 2023. It is currently trading at a price-to-earnings (P/E) ratio of 27.93, which is well above the JSE Overall Index (14.51) and higher than other leading banks. Despite this premium valuation, Capitec remains an exceptional long-term investment due to its strong growth trajectory and market position.
We believe Capitec should be accumulated on weakness. It was added to the Winning Shares List (WSL) on 4th November 2023 at 185,496c, and since then, it has risen by 60% in just 14 months. Given its robust financials, innovative banking model, and customer growth, Capitec remains one of the best long-term opportunities on the JSE.
Our opinion on the current state of CAPITEC(CPI)Capitec Bank (CPI), now the country's largest bank by customer numbers (21,1m), was launched by PSG and has been a major disrupter in the South African banking system. It has steadily taken retail market share from the other banks by offering a cheaper and easier solution, especially for the previously unbanked section of the population. The company is adding about 90 000 funeral policies every month. In our view, this share is a "must-have" for any private investor's portfolio. Its parent company, PSG, has now unbundled its holding of Capitec shares to release shareholder value.
Capitec's client base is mostly in the lower living standards measure (LSM) levels, so it has just less than 10% of the retail deposit base despite its enormous number of clients. Capitec's annual average growth in HEPS for the past 19 years since 2003 is 32,2% per annum – an incredible record. On 19th January 2022, the company announced that it intends to conduct a BBBEE transaction by giving about R1bn worth of its shares to staff who have been working at the company since the beginning of 2019 or earlier. The issue is expected to dilute the share and caused the share price to fall.
In its results for the year to 29th February 2024, the company reported headline earnings per share (HEPS) up 16% and return on equity (ROE) of 26%. The bank increased its number of active clients by 10% to 22,2 million. The company said, "Non-interest income made a significant contribution to the 16% growth in headline earnings for the 2024 financial year and increased to 72% of income from operations after credit impairments."
In a trading statement for the six months to 31st August 2024, the company estimated that HEPS would increase by between 35% and 37%. The company said, "The lower CLRs have persisted into the 2025 financial year and the net transaction and commission income, including value-added services, has continued to contribute to strong growth in non-lending income."
Technically, the share has been rising since June 2023. It is now on a multiple of 32,21 – which is still well above the JSE Overall Index (14,88) and other leading banks. Despite this, in our view, Capitec remains excellent value. This is a share you should accumulate on weakness.
Our opinion on the current state of CAPITEC(CPI)Capitec Bank (CPI), now the country's largest bank by customer numbers (21,1m), was launched by PSG and has been a major disruptor in the South African banking system. It has steadily taken retail market share from the other banks by offering a cheaper and easier solution, especially for the previously unbanked section of our population. The company is adding about 90,000 funeral policies every month. In our view, this share is a "must-have" for any private investor's portfolio.
Capitec's parent company, PSG, has now unbundled its holding of Capitec shares to release shareholder value. Capitec's client base is mostly in the lower living standards measure (LSM) levels, and so it has just less than 10% of the retail deposit base despite its enormous number of clients. Capitec's annual average growth in HEPS for the past 19 years since 2003 is 32,2% per annum - an incredible record.
On 19th January 2022, the company announced that it intends to conduct a BBBEE transaction by giving about R1bn worth of its shares to staff who have been working at the company since the beginning of 2019 or earlier. The issue is expected to dilute the share and caused the share price to fall.
In its results for the year to 29th February 2024, the company reported headline earnings per share (HEPS) up 16% and return on equity (ROE) of 26%. The bank increased its number of active clients by 10% to 22,2 million. The company said, "Non-interest income made a significant contribution to the 16% growth in headline earnings for the 2024 financial year and increased to 72% of income from operations after credit impairments."
In a trading statement for the six months to 31st August 2024, the company estimated that HEPS would increase by between 25% and 35%. The company said, "The lower CLRs have persisted into the 2025 financial year and the net transaction and commission income including value-added services has continued to contribute to strong growth in non-lending income."
Technically, the share has been rising since June 2023. It is now on a multiple of 29,79 - which is still well above the JSE Overall index (13,61) and other leading banks. Despite this, in our view, Capitec remains excellent value. This is a share you should accumulate on weakness.
REVERSAL Idea - Capitec Bank - first down to R2400 then up 2900Broadening Pattern has formed with Capitec.
When this pattern forms it bounces between ranges.
Right now it bounced off the top of the range, and is most likely to come down 50% from the most recent rally.
Once it comes down to a target of R2,400 then it could consolidate move sideways and then breakup to the next target at R2,900.
This is a little different from breakout trading, but I was asked for an analysis around this.
Short based on earningsSouth Africa's biggest micro lender could be hurt by the dollar and global uncertainty around the world since the banks make profit from people paying back loans and putting in deposits, people deposit less when everything in the economy becomes expensive because savings lags when compared to current state of the value of money and the purchasing power people have. This year financial stocks could also be hurt by the uncertainty that comes with elections also the policies that the new or current leadership of the country could choose to implement. to (Reuters,2024) the bank experienced an increase in credit impairment charges which rose by 38% and the tightening of credit granting criteria. The institution also experienced an increase in net transactions and commissions but the number of bad loans as percentage of total laons in retail banking increased to 101 basis points from 80 basis points in 2023.
$JSECPI - Capitec: I Count Five Waves & Bearish DivergenceSee link below for previous analysis.
Capitec continued to trend as previously forecasted but now there are two major signs of concern.
I count five waves up from the May 2023 low and there is strong price/MACD divergence.
Wave 5 can continue further up from here but a break below 196116 cps will confirm that the the five wave advance is complete; a new should see wave 5 extend into new all-time highs.
I am neutral at this juncture.
Capitec Vuvuzela with bullish bias & strong fundaments to R2,485Capitec has been in this Broadening Pattern (Vuvuzela) formation since November 2023.
It breaks into higher highs and lower lows. But the overall momentum and trend channel is up.
It will continue trading in this range until we get a breakout of the resistance or support. My bet is it will first trade to the top of the range at R2,485.92.
Capitec has always been the outlier compared to the other banks with very little correlation. WHen it does well, it runs up regadless what the bigger banks are doing.
Also fundamentally, it doesn't seem to follow suit with the Big 5.
Firstly, Capitec announced a substantial 15% growth in headline earnings, which reached R9.7 billion.
This increase was driven by growth across various sectors of the bank, including a notable 124% profit surge in its business banking sector and a significant increase in net lending, investment, and insurance income
Also, Capitec has been actively investing in innovative digital solutions and client rewards programs, which have contributed to its strong performance.
They introduced a variety of digital payment solutions like Apple Pay, Samsung Pay, and Google Pay with zero transaction fees, as well as their own secure online payment tool, Capitec Pay.
So ye, big up to an innovative unclipped wings bank like Capitec.
Our opinion on the current state of CAPITEC(CPI)Capitec Bank (CPI) stands as a formidable presence in the South African banking sector, having significantly disrupted the market since its inception by PSG. Known for its customer-centric model, Capitec has successfully attracted a vast client base, primarily serving the previously unbanked segments of the population. This approach has enabled it to become the country's largest bank by customer numbers, boasting 21.1 million clients.
Capitec's strategy of offering accessible and affordable banking solutions has been instrumental in its ability to capture retail market share from traditional banks. Its innovative offerings, such as adding approximately 90,000 funeral policies every month, underscore its commitment to addressing the diverse needs of its clientele.
The bank's performance has been robust, with an impressive average annual growth in headline earnings per share (HEPS) of 32.2% over the past 19 years. This growth trajectory highlights Capitec's effective management and strong market positioning. Despite holding less than 10% of the retail deposit base—a reflection of its focus on lower living standards measure (LSM) levels—Capitec continues to expand its influence in the financial sector.
A significant development in Capitec's corporate strategy was the unbundling of its holding by parent company PSG, a move aimed at unlocking shareholder value. Additionally, Capitec's commitment to broad-based black economic empowerment (BBBEE) was demonstrated through its plan to distribute approximately R1 billion worth of shares to long-serving staff, initiated on 19th January 2022. Although this move led to a temporary dip in share price due to expected dilution, it reflects a long-term investment in employee stakeholder engagement and equity.
For the fiscal year ending on 29th February 2024, Capitec reported a 16% increase in HEPS and a return on equity (ROE) of 26%. The bank also grew its number of active clients by 10% to 22.2 million. Notably, non-interest income significantly contributed to the earnings growth, comprising 72% of income from operations after credit impairments. This shift towards non-interest income is a strategic move that diversifies revenue streams and reduces dependence on traditional interest-based income.
The stock has been on an upward trajectory since June 2023, currently trading at a price-to-earnings (P/E) ratio of 23.7. While this is higher than the JSE Overall index and other leading banks, Capitec's strong fundamentals, consistent performance, and strategic market positioning justify this premium.
In conclusion, Capitec remains a compelling investment within the South African banking sector. Its innovative approach to banking, combined with significant growth and strategic expansions, position it well for continued success. Investors should consider accumulating shares on any market weakness, taking advantage of Capitec's potential for long-term growth and value creation.
CPI - In The MoneyThe chart below highlights the performance of Capitec Bank, which has declined by over 10% since last week's research note where clients were to a pending sell/short.
Included in my note was the following:
1. Weekly Chart highlighting the potential price path.
2. The TTG as of Friday's close.
3. The 7-day Technical Trend Rating shows the share as trading in overbought territory.
4. The 7-Week Technical Trend Rating shows the share as trading in 'high bullish momentum/approaching overbought' territory.
5. A common valuation metric for banks is Price-to-book. As of Friday's close, Capitec trades at 6.48x vs substantially lower levels for it's peer group.
Biggest micro lender could be hurt by the dollar (short)South Africa's biggest micro lender could be hurt by the dollar and global uncertainty around the world since the banks make profit from people paying back loans and putting in deposits, people deposit less when everything in the economy becomes expensive because savings lags when compared to current state of the value of money and the purchasing power people have. This year financial stocks could also be hurt by the uncertainty that comes with elections also the policies that the new or current leadership of the country could choose to implement.
Capitec fakeout and waiting for conservative buy levelWe saw Capitec form a W Formation. The price broke above the neckline and then made a fakeout.
Now it will be testing the uptrend support line before further upside to come.
I am bullish cautiously, but we still need the demand levels to pick up.
The target will then be R2,485.00
Our opinion on the current state of Capitec Bank Holdings Limited (CPI), with its roots in PSG, has dramatically transformed the South African banking landscape, establishing itself as the largest bank in the country by customer numbers, with over 21.1 million clients. Its innovative approach to banking, characterized by affordable and accessible services, particularly for the previously unbanked segments of the population, has enabled it to consistently capture market share from traditional banking institutions. The introduction of around 90,000 funeral policies each month further underscores Capitec's expansion into diverse financial products and its deepening engagement with its client base.
The decision by PSG to unbundle its holding of Capitec shares, aimed at unlocking shareholder value, marks a significant milestone in Capitec's journey, emphasizing its independence and growth potential. Despite Capitec's vast client base primarily residing in the lower living standards measure (LSM) levels and holding less than 10% of the retail deposit base, its remarkable average annual growth in headline earnings per share (HEPS) of 32.2% over the past 19 years since 2003 stands as a testament to its exceptional performance and strategic execution.
The bank's initiative to conduct a Broad-Based Black Economic Empowerment (BBBEE) transaction by allocating approximately R1 billion worth of shares to long-serving staff illustrates its commitment to inclusivity and empowerment, despite the temporary dilutive impact on its share price. For the six-month period ending 31st August 2023, Capitec reported a 17% increase in net interest income and a 9% rise in HEPS, driven by its continuous investment in innovation and an 11% growth in the number of active clients, leading to an 18% surge in retail transaction volumes.
Looking ahead to the financial year ending 29th February 2024, Capitec anticipates a HEPS increase of between 14% and 16%, highlighting the bank's robust performance, particularly in net transaction and commission income, propelled by the digital engagement of its expanding client base.
Despite trading at a price-to-earnings (P:E) multiple of 24.85, significantly above the JSE Overall index and other leading banks, Capitec's value proposition remains compelling. Its proven track record of growth, innovation, and market penetration, combined with strong financial performance and strategic initiatives, positions Capitec as a valuable addition to any private investor's portfolio. The recommendation to accumulate shares on weakness reflects confidence in Capitec's continued growth trajectory and its role as a major disruptor and innovator within the South African banking sector.
CPISell at current levels or higher. Six Key Drivers: (1) Negative candle structure; (2) Price rejection at multi month swing highs, (3) The development of a small bear flag technical formation; (4) Negative divergence as per the 14-day RSI; (5) Pending print below the 50 level on the 14-day RSI; (6) Price extended versus 200-day SMA. As always, traders could consider the following if/when the share approaches the target: bank/take profit, partially scale out, adjust the stop-loss to protect profits. Time stop: Friday, 22 March 2024.
TRADING LEVELS:
Entry: 197012
Target: 181000
Stop-loss: 209500
$JSECPI - Capitec Bank: Buy The Dips Above 161601See link below for previous analysis.
Capitec's trend has become clearer over the last couple of weeks.
A bottom looks to be in at 132856, a 44% decline from the all time high.
The 13 month bear market unfolded as a double-zigzag (WXY).
Price action looks impulsive from 132856 and if the wave count is correct, the stock is in the early stages of wave 3 so "buy the dip" above 161601 is the strategy.
Our opinion on the current state of CPICapitec Bank (CPI), now the country's largest bank by customer numbers (21,1m), was launched by PSG, and has been a major disrupter in the South African banking system. It has steadily taken retail market share from the other banks by offering a cheaper and easier solution, especially for the previously unbanked section of our population. The company is adding about 90 000 funeral policies every month. In our view, this share is a "must-have" for any private investor's portfolio. Its parent company, PSG has now unbundled its holding of Capitec shares to release shareholder value. Capitec's client base is mostly in the lower living standards measure (LSM) levels and so it has just less than 10% of the retail deposit base despite its enormous number of clients. Capitec's annual average growth in HEPS for the past 19 years since 2003 is 32,2% per annum - an incredible record. On 19th January 2022 the company announced that it intends to conduct a BBBEE transaction by giving about R1bn worth of its shares to staff who have been working at the company since the beginning of 2019 or earlier. The issue is expected to dilute the share and caused the share price to fall. In its results for the six months to 31st August 2023 the company reported net interest income up 17% and headline earnings per share (HEPS) up 9%. The company said, "The net transaction and commission income was 40% of income from operations (August 2022: 39%) and grew by 24% to R6.9 billion (August 2022: R5.6 billion). The performance was driven by our consistent investment in innovation and an increase of 11% in the number of active clients which led to an 18% increase in retail transaction volumes". Technically, the share has been falling since its record high of 237348c made on 4th April 2022. We ascribe this fall partly to the correction which took place on world markets in 2022. Capitec's high earnings multiple has made it vulnerable to systematic risk. It is now on a multiple of 20,8 - which is still well above the JSE Overall index (10,4) and other leading banks. In our view, Capitec is beginning to look like excellent value. This is a share you should accumulate on weakness.
Our opinion on the current state of CPICapitec Bank (CPI), now the country's largest bank by customer numbers (up 14% to 18,1m), was launched by PSG, and has been a major disrupter in the South African banking system. It has steadily taken retail market share from the other banks by offering a cheaper and easier solution, especially for the previously unbanked section of our population. The company is adding about 90 000 funeral policies every month. In our view, this share is a "must-have" for any private investor's portfolio. Its parent company, PSG has now unbundled its holding of Capitec shares to release shareholder value. Capitec's client base is mostly in the lower living standards measure (LSM) levels and so it has just less than 10% of the retail deposit base despite its enormous number of clients. Capitec's annual average growth in HEPS for the past 19 years since 2003 is 32,2% per annum - an incredible record. On 19th January 2022 the company announced that it intends to conduct a BBBEE transaction by giving about R1bn worth of its shares to staff who have been working at the company since the beginning of 2019 or earlier. The issue is expected to dilute the share and caused the share price to fall. In its results for the year to 28th February 2023 the company reported headline earnings per share (HEPS) up 15% after increasing their provision for bad debts by 80% to R6,3bn from the previous year's R3,5bn. The bank says that the increased provision is a result of "normalising" after COVID19 and as a result of higher interest rates. The company said, "Our clients expended on average 8% more on groceries and 16% more on fuel for the 2023 financial year compared to the previous financial year. The increase in spend on groceries was tempered by the effect of clients buying more affordable products. The value of the average loan debit order increased by 20%, and the average vehicle finance debit order grew by 15%. The average increase in income into client accounts, however, only grew by 4% on average compared to 10% for the comparative period". In a voluntary trading statement for the six months to 31st August 2023 the company estimated that HEPS would increase by between 8% and 10%. The company said, "During the 6 months ended 31 August 2023, the credit granting criteria were tightened further to appropriately address the risk in the loan book created by the adverse economic conditions". Technically, the share has been falling since its record high of 237348c made on 4th April 2022. We ascribe this fall partly to the correction which took place on world markets in 2022. Capitec's high earnings multiple has made it vulnerable to systematic risk. It is now on a multiple of 20,34 - which is still well above the JSE Overall index (10,55) and other leading banks. In our view, Capitec is beginning to look like excellent value. This is a share you should accumulate on weakness.
CAPITEC BANK (CPI)We expect a bearish movement as the price retreats from the High Supply area supported by previous resistance, FRVP, and RSI-overbought conditions. Traders should monitor the price action closely for a potential bounce or reversal around the trend support line to identify possible buying opportunities.
Capitec: Not Out the Woods YetCapitec was rejected at the upper resistance, which is near the 200-day moving average, so the region can be read as double resistance. However, to confirm a bearish bias, I will be observing price pulling towards the horizontal support. We want to see price go below R1,793.14. In that case price will trend down into May/June bottom. The lower trendline and 200 week moving average become potential reversal zones.
Capitec C&H ready to rumble to R1,853Cup and Handle has formed on Capitec's Daily chart.
We've had a disappointing 12 months with banks and its downside.
And today, the price opened above the Brim Level. This means, the buying and demand is more likely to take the price higher.
Other indicators confirm:
7>21 - Bullish
Price<200 But price is heading to the 200MA
RSI>50
Target R1,853.
SMC
Sell SIde Liquidity Below the C&H. You can see previous wicks touching the Order Block and then the price rallying. That's Smart Money buying up and sweeping selling from retailers.
Only concern is the current downtrend, which is still intact. We need the price to break above, for the confirmation to really get this going.
ABOUT THE COMPANY
Founded in 2001:
Capitec Bank was founded on 1 March 2001 and has its headquarters in Stellenbosch, South Africa.
Retail Focus:
The bank primarily focuses on providing retail banking services, such as savings, payments, and lending products.
Innovative Business Model: Capitec was one of the first banks in South Africa to operate on a branch-based model rather than using separate branches for personal and business banking.
Digital Banking:
Capitec offers innovative digital banking services, including internet banking and a mobile banking app, which has won several awards.
Affordable Fees:
Capitec is known for its relatively low banking fees compared to other South African banks, which has contributed to its popularity.
Unsecured Loans:
Capitec was one of the first banks in South Africa to offer large, unsecured loans.
CapitecGiven the sector's weakness, it's no surprise that JSE:CPI chose the downside.
The FX:USDZAR , US regional banks, load-shedding, political uncertainty (South Africa is a political stable country but we choose to entertain the politicised media), add whatever excuse you want but the banks are weak.
