By Peet Serfontein & Sithembile Bopela
We enter a long position. Our upside target is set at R17.50 (reward-risk ratio: 2.6:1). We recommend a stop-loss at R14.
Life Healthcare is an international healthcare provider. Its geographic footprint spans across southern Africa, the United Kingdom, and Europe. In southern Africa, the group operates a hospital division and a healthcare services division. The international segment includes Life Molecular Imaging (LMI), which is currently held for sale.
Fundamentally, we view Life Healthcare as a solid player within the healthcare space. We expect persistence in elective surgery demand to remain supportive of volumes and margins, which may translate into decent bottom-line growth over the medium term. The disposal of LMI will refine Life's focus on southern African growth through its integrated and value-based care model, which will benefit from improved management focus should the disposal proceed.
Technically, a price holding above its 200-day simple moving average makes the share attractive as an investment opportunity. This indicator signals strong bullish momentum and long-term uptrend stability. This level also coincides with the 38.2% Fibonacci retracement, providing additional support and reinforcing its significance.
The price action in a trough according to the Elliott Wave theory, supports the bullish case for the share (see the insert). This insert highlights a series of higher highs and higher lows, indicating a strong uptrend supported by consistent wave formations.
According to forward calculations of the RSI (Relative Strength Index), the stock will be overbought at ~R27. This classifies our profit target of R17.50 as realistic.
We suggest a medium capital at-risk allocation to this trade. Increase exposure for a break above R15.50.
| Share Information | |
|---|---|
| Share Code | LHC |
| Industry | Health Care Equipment & Services |
| Market Capital (ZAR) | 22.1 billion |
| One Year Total Return | 42.14% |
| Return Year-to-Date | -4.18% |
| Current Price (ZAR) | 1 504.00 |
| 52 Week High (ZAR) | 1 727.84 |
| 52 Week Low (ZAR) | 952.14 |
| Financial Year End | September |
| Several technical indicators are pointing to upside potential. Expect moderate volatility in the price. | |
| FNB SPM Expectations |
||||
|---|---|---|---|---|
| FY24 | FY25E | FY26E | FY27E | |
| Headline Earnings per Share (ZAR) | 1.32 | 1.25 | 1.36 | 1.68 |
| Growth (%) | -5.52 | 8.80 | 23.16 | |
| Dividend Per Share (ZAR) | 0.50 | 0.61 | 1.25 | 0.90 |
| Growth (%) | 21.20 | 105.94 | -27.56 | |
| Forward PE (times) | 11.62 | 10.12 | 8.98 | |
| Forward Dividend Yield (%) | 4.03 | 8.30 | 6.01 | |
| While earnings are expected to be under pressure over the short-term, solid growth is expected in FY26 and FY27. The dividend yield is also expected to improve meaningfully. | ||||
Buy/Sell Rationale:
Technical Analysis:
Fundamental view
| Share Name and Position | STXIND - Take profit (Close the position) |
VOD - BUY (Continue to hold) |
APN - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 114.97 | 109.87 | 171.38 |
| Current | 125.40 | 116.50 | 173.11 |
| Movement | 9.1% | 6.0% | 1.0% |
| Given current market conditions, we recommend closing this position to secure gains and mitigate potential downside risks. |
The price volume swing remains of interest. Remains above its 200-day simple moving average. However, it seems like the 200-week simple moving average is acting as major resistance. Upside price momentum supports the trade strategy developments.
Our profit target is R125, with a trailing stop-loss at R103. Exit the trade around 7 April 2025. |
A price that is testing major support remains of interest. Remains below its 200-day simple moving average, and the trade idea is regarded as a counter-trend strategy. However, upside price momentum supports the trade strategy.
Our profit target is R196, with a trailing stop-loss at R163.50. Exit the trade around 26 May 2025. |
| Share Name and Position | CML - BUY (Continue to hold) |
GRT - BUY (Continue to hold) |
SHP - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 37.75 | 13.22 | 292.78 |
| Current | 37.80 | 12.53 | 27.50 |
| Movement | 0.1% | -5.2% | -6.1% |
|
A price action at the pivotal point of crossing both the 200-day and 200-week simple moving averages (SMA) remains of interest. Fading downside price momentum supports the trade idea.
Take profit target set at R42. Trailing stop-loss at R36. Time to exit: 19 May 2025. |
A price trading at one of the highest price bins out of the price distribution analysis remains of interest. Remains below its 200-day simple moving average but seems to be approaching it. Fading downside price momentum supports the trade strategy.
Our profit target is R16, with a trailing stop-loss at R14. Exit the trade around 17 November 2025. |
A price that appears to be in a phase of low volatility remains of interest. Remains below its 200-day simple moving average and the trade idea is regarded as a counter-trend strategy. Downside price momentum halted, supporting the trade idea.
Our profit target is R317, with a trailing stop-loss at R268. Exit the trade around 1 September 2025. |
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