By Peet Serfontein, Jalpa Bhoolia
Sanlam is a leading financial services group in South Africa with a footprint across the African continent. The group has provided financial solutions to individual and institutional clients for over 100 years. These solutions include individual, group and short-term insurance, personal financial services such as estate planning, trusts, home and personal loans, savings and linked products, investment, asset management, property asset management, stockbroking, risk management and capital market activities.
Sanlam is highly regarded from a qualitative perspective, with the group being well-diversified from a geographic and product standpoint. Sanlam boasts a strong balance sheet with more-than-adequate reserves.
On a technical basis, a price that remains above key support makes for an attractive investment option (see the black dotted trendline on the main chart). This signals that market sentiment is positive, supportive of a bullish trend. It is however important to note that the price remains in a downward trending channel (see the black solid parallel trendlines), indicating persistent bearish risks.
Fading downside price momentum according to the Moving Average Convergence Divergence (MACD) histogram is supportive.
According to the RSI (Relative Strength Index), the stock will be overbought at ~R130. This classifies our profit target of R74 as realistic.
We suggest a low capital at-risk allocation to this trade.
Share Information
| Share Code | SLM |
|---|---|
| Industry | Insurance |
| Market Capital (ZAR) | 142.88 billion |
| One Year Total Return | 23.72% |
| Return Year-to-Date | -5.37% |
| Current Price (ZAR) | 64.86 |
| 52 Week High (ZAR) | 75.09 |
| 52 Week Low (ZAR) | 50.21 |
| Financial Year End | December |
| The share price has been under some pressure year-to-date. Several technical indicators point to upside potential of the share. Expect moderate price volatility. |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (ZAR) | 6.92 | 7.17 | 7.71 | 8.23 |
| Growth (%) | 3.58 | 7.62 | 6.65 | |
| Dividend Per Share (ZAR) | 4.00 | 4.48 | 4.83 | 5.02 |
| Growth (%) | 11.88 | 7.98 | 3.95 | |
| Forward PE (times) | 9.05 | 8.41 | 7.88 | |
| Forward Dividend Yield (%) | 6.90 | 7.45 | 7.74 | |
| Steady growth is expected over the forecast horizon. The company offers an attractive dividend yield. | ||||
Rationale
Technical Analysis:
Fundamental Analysis
| Share Name and position | BTI - Stop Loss (Close the Position) | MNP - BUY (Continue to hold) | NPN - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 562.87 | 332.67 | 3095.26 |
| Current | 536.25 | 355.54 | 3257.39 |
| Movement | -4.7% | 6.9% | 5.2% |
| The share triggered a stop-loss, and the position was subsequently closed. |
A share trading in a well-defined price range remains of interest. The start of upside price momentum is supportive. Remains above its 200-day simple moving average.
Our take profit target remains at R379 with a trailing stop-loss level at R337. Exit the trade on 17 June 2024. |
Seems to be well positioned for a repetitive sequence in monthly performances. Upside price momentum is supportive. Remains above its 200-day simple moving average.
Our take profit target remains at R3633 with a trailing stop-loss level at R3042. Exit the trade on 8 July 2024. |
| Share Name and position | SNT - BUY (Continue to hold) | MRP - BUY (Continue to hold) |
|---|---|---|
| Entry | 296.56 | 157.50 |
| Current | 296.03 | 162.42 |
| Movement | -0.2% | -0.5% |
|
An incomplete cup and saucer pattern remains of interest. Fading downside momentum is a positive. Crossed its 200-day simple moving average.
Our take profit target remains at R337 with a trailing stop-loss level at R280. Exit the trade on 29 April 2024. |
A price coinciding with a trough in the business cycle remains of interest. Strong downside price momentum is a concern. Remains just above its 200-day simple moving average.
Our take profit target remains at R213 with a trailing stop-loss level at R135. Exit the trade on 7 April 2025. |
