Sanlam is a leading financial services group in South Africa with a footprint across the African continent and beyond. Sanlam 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.
The company is regarded as a core portfolio holding. It is highly regarded from a quality perspective, with the company being well-diversified from a geographic and product standpoint. Sanlam boasts a strong balance sheet with adequate reserves.
Technically, a price above critical support levels and falls within the RRG® quadrant of "potential hold or profit take", makes the share attractive as an investment opportunity. Refer to the insert and the black support trendline.
In RRG® charts, shares with strong relative strength and momentum are displayed in the leading quadrant (potential hold or profit-take), represented by the colour green.
As relative momentum weakens, shares typically move into the yellow quadrant (potential sell). If relative strength also diminishes, they shift into the red quadrant (potential avoid). Once momentum begins to improve again, they move into the blue quadrant (potential buy). The red tail on the graph indicates how the share price developed over the last five weeks.
According to the RSI (Relative Strength Index), the stock will be overbought at ~R78. This classifies our profit target of R76 as realistic.
We suggest a medium capital at-risk allocation to this trade.
Share Information
| Share code | SLM |
|---|---|
| Industry | Insurance |
| Market capatalisation (ZAR) | 128.45 billion |
| One year total return | -8.21% |
| Return year-to-date | 18.39% |
| Current price(ZAR) | 57.68 |
| 52 weeek high(ZAR) | 73.20 |
| 52 week low(ZAR) | 46.86 |
| Financial year end | December |
| Closing paragraph | The share price has captured good returns year-to-date, and several technical indicators confirm a continuation of this trend. Expect moderate to high volatility in the price. |
Consensus expectations
(Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (ZAR) | 4.33 | 5.47 | 6.13 | 6.93 |
| Growth (%) | - | 26.30 | 12.06 | 13.05 |
| Dividend Per Share (ZAR) | 3.34 | 3.80 | 4.11 | 4.39 |
| Growth (%) | - | 5.56 | 8.22 | 6.72 |
| Forward PE (times) | - | 10.54 | 9.41 | 8.32 |
| Forward Dividend Yield (%) | - | 6.58 | 7.12 | 7.60 |
| Closing paragraph | Growth is expected to remain solid over the forecast horizon. The company offers an attractive dividend yield. | |||
Buy or Sell Rationale
Technical Analysis :
Fundamental Analysis:
| Share Name and position | MNP - Stop loss (Close the Position) | MTN - Stop loss (Close the Position) | OMU - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 324.99 | 132.49 | 11.67 |
| Current | 306.00 | 141.34 | 12.05 |
| Movement | -5.8% | 6.7% | 3.3% |
| Summary text | The share price reached our stop-loss level, and we closed the position. |
The price appears to be at the beginning of wave 3 of a 5-wave analysis. Remains just above its 200-day simple moving average.
Take profit target set at R190. Trailing stop-loss at R117.50. Time to exit: 6 November 2023. |
A price counter-testing a bearish trend remains of interest. Remains above its 200-day simple moving average.
Take profit target set at R16. Trailing stop-loss at R10.20. Time to exit: 17 November 2023. |
| Share Name and position | LHC - BUY (Continue to hold) | VOD - BUY (Continue to hold) | REM - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 19.30 | 126.50 | 137.48 |
| Current | 19.74 | 127.02 | 137.85 |
| Movement | 2.3% | 0.4% | 0.3% |
| Summary text |
Currently above its 200-day simple moving average and near a major resistance level.
Take profit target set at R22.20. Trailing stop-loss at R18.50. Time to exit: 26 June 2023. |
The price is close to testing its 200-day simple moving average and is just below the 50% Fibonacci retracement level.
Take profit target set at R144. Trailing stop-loss at R120. Time to exit: 1 May 2023. |
A price above major support is of interest. Remains above its 200-day simple moving average.
Take profit target set at R152. Trailing stop-loss at R131. Time to exit: 3 April 2023. |
