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Harith FMFML
Further to run

​Two analysts who follow the company believe it has much further to run, however.

Avior’s Harry Botha has a target price of R867 on Capitec, while Arqaam Capital MD Jaap Meijer has R913 in his sights.

Capitec hit R832 on June 30 following its reinclusion into the JSE’s Top 40 index on June 19, which has helped pull index tracking funds towards it.

The rally was no doubt bolstered by the Lafferty Group’s recent appraisal of Capitec as the best bank in the world for the second year running. Botha said Capitec’s ability to continue attracting more than 100,000 customers a month was a big positive because it offset the bank’s dependence on unsecured lending in an increasingly straitened economy.

Arqaam said there was a lot of opportunity for Capitec to diversify into products such as insurance — although the Lafferty Group said "diversification often results in a lack of customer focus".

Meijer said that "even though Capitec has been around for a generation, we still see the bank as a disrupter".

Capitec has an 11% market share among customers earning R10,000 a month or more. It wants to take this to 20% by 2020, with an overall market share target of 30%.

Meijer said Capitec’s funding costs were becoming less of a "competitive disadvantage", notwithstanding that it did not have access to zero-cost deposits — typically low interest-paying current accounts.

This is one of the reasons that Capitec does not offer its own mortgages but chooses to use SA Home Loans instead.
Not everyone shares Avior and Arqaam’s enthusiasm for the share.

Of the 10 analysts surveyed by Bloomberg, four have a buy call, four rate it a sell, while two reckon it is a hold.

SBG Securities’ target price is just R550 for the stock, implying a fall of about 30% from the close on Monday.

Renaissance Capital also rates Capitec as an underperform and expects it to trade to R585 a share.

Last week, Capitec chief financial officer Andre du Plessis cashed in 9,000 shares, raking in about R7.35m after selling tranches of stock between R815 and R819.31.