Peet Serfontein & Jalpa Bhoolia.
Momentum Metropolitan Holdings is a South African-based financial services group. Its core business is focused on long and short-term insurance, asset management, savings, investment, healthcare administration and employee benefits. These product and service solutions are provided through two well-known operating brands, namely Metropolitan and Momentum.
Technically, a share that is developing a rounding bottom pattern presents an interesting investment opportunity (see the overlay on the price action).
A rounding bottom pattern (a saucer bottom) is considered bullish and signals a potential downtrend reversal. The pattern is characterised by a steady price decline, after which the price stabilises and then gradually increases, thus resembling the shape of a saucer. The pattern indicates that selling pressure is diminishing, while the gradual increase in the price during the right side of the pattern reflects growing interest from buyers.
The stock is in a markup phase - supportive of a bullish trend. The price begins to move higher after a period of accumulation as investors who have identified the share's potential during the accumulation phase begin buying in larger volumes.
According to the RSI (Relative Strength Index), the stock will be overbought at ~R25.00, which classifies our profit target of R24.50 as realistic.
We suggest a low capital at-risk allocation to this trade. Increase exposure for a break above R22.20.
Share Information
| Share Code | MTM |
|---|---|
| Industry | Insurance |
| Market Capital (ZAR) | 29.81 billion |
| One Year Total Return | 27.94% |
| Return Year-to-Date | -2.79% |
| Current Price (ZAR) | 21.28 |
| 52 Week High (ZAR) | 22.44 |
| 52 Week Low (ZAR) | 16.46 |
| Financial Year End | June |
| The share appears to be attempting a recovery - several technical indicators are supportive of upside momentum. Expect moderate price volatility. |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (ZAR) | 3.38 | 3.27 | 3.46 | 3.59 |
| Growth (%) | -3.37 | 5.88 | 3.70 | |
| Dividend Per Share (ZAR) | 1.20 | 1.37 | 1.34 | 1.50 |
| Growth (%) | 14.25 | -2.26 | 12.09 | |
| Forward PE (times) | 6.51 | 6.15 | 5.93 | |
| Forward Dividend Yield (%) | 6.44 | 6.30 | 7.06 | |
| Earnings are expected to be under some pressure in FY24, but a rebound is anticipated over FY25. The dividend yield remains relatively attractive. | ||||
Buy/Sell Rationale
Technical Analysis:
Fundamental view:
| Share Name and position | DCP - Profit take (Close the position) |
OUT - Stop-loss (Close the position) |
APN - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 30.73 | 42.50 | 182.66 |
| Current | 34.00 | 38.71 | 210.50 |
| Movement | 10.6% | -8.9% | 15.2% |
| We suggest taking profit early on this position. | The stock recently triggered our stop-loss level, leading us to close the position. |
A developing symmetrical triangle pattern remains of interest. Trades above its 200-day simple moving average. Upside momentum is a positive.
Our profit target is R222, with a trailing stop-loss at R186. Exit the trade on 27 December 2024. |
| Share Name and position | MRP - BUY (Continue to hold) |
GLN - BUY (Continue to hold) |
SNT - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 157.50 | 97.10 | 296.56 |
| Current | 175.80 | 100.09 | 301.00 |
| Movement | 11.6% | -2.6% | 1.5% |
|
A price coinciding with a trough in the business cycle remains of interest. Upside momentum is a highlight. Trading above its 200-day simple moving average.
Our take profit target remains at R213 with a trailing stop-loss level at R153. Exit the trade on 7 April 2025. |
A price action that recently prompted a buy signal according to Bollinger Bands crossovers remains of interest. Upside price momentum is supportive. Approaching its 200-day simple moving average.
Our take profit target remains at R112 with a trailing stop-loss level at R94. Exit the trade on 17 June 2024. |
An incomplete cup and saucer pattern remains of interest. Upside price momentum has halted, which is a concern. Remains above its 200-day simple moving average.
Our take profit target remains at R337 with a trailing stop-loss level at R285. Exit the trade on 29 April 2024. |
