BANK WINDHOEK HOLDINGS LTD - PSG - BWH...PSG Namibia 30 August 2016 Bank Windhoek Holdings Full year...

This report has been prepared by PSG Namibia. PSG does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have conflict of interest that could affect the objectivity of this report. Investors should condsider this report as only a single factor in making their investment decision.

Eloise du Plessis

Analyst and Equity Strategist

[email protected] +264 61 378 900

BANK WINDHOEK HOLDINGS LTD Results Review – June 2016

How did the results compare vs

expectations?

Earnings growth came in slightly below expectations at 20.2% vs 22.6% forecasted. This is largely due to lower than expected Net Interest Income with advances growth slowing significantly in the last 6 months. Trading income growth was much higher than expected and impairments came in at very low levels.

What were the most noteworthy areas in the results?

BWH managed to continue to grow Non-interest Income in line with our forecasts even though advances growth and deposits growth were lower than expected. Impairments at 0.24% is a figure much lower than expected and remarkable for a rising interest rate cycle.

Has the company's outlook/guidance changed?

We expect to see more detailed strategy notes in the integrated report which is to be launched on 22 September 2016. In the results published now, the tone has turned slightly negative with the outlook focusing on a challenging economic environment.

How would we expect investors to react?

We expect that investors will be very happy with the results. The dividend yield of 3.8% is higher than expected and at a P/E ratio of 9.6 the share offers value.

• Strong sustained earnings growth

• Sustained NII and NIR growth

• Very close relationship with clients, strong local decision-making

Power"Does the company have a

sustainable competitive advantage?"

• Prudent, sustained advances growth

• Management improved ROA over time through asset utilisation

• Strong growth in liquid assets to deposit ratio

People"Does management create or destroy value as stewards of

capital?"

• Recommendation Buy (Previous Hold)

• 12 month target price (N$ cps) 2078 (previously 1869)

• P/BVx 2.0

• Historical PEx (12 m rolling) 9.6

Price"What should we pay for this

company?"

HIGHLIGHTS (N$ 000) FY14 FY15 FY16E FY17E FY18E FY19E

Net Interest Income (NII) 1 056 898 1 266 961 1 458 142 1 680 348 1 891 742 2 148 338

Growth 15.6% 19.9% 15.1% 15.2% 12.6% 13.6%

Non-interest Income 679 732 811 891 953 804 1 108 511 1 280 722 1 481 641

Growth 29.9% 19.4% 17.5% 16.2% 15.5% 15.7%

Profit before tax 878 289 1 067 142 1 269 542 1 470 227 1 683 531 1 927 924

Growth 23.8% 21.5% 19.0% 15.8% 14.5% 14.5%

Net earnings 606 221 753 218 905 378 1 050 861 1 202 307 1 375 826

EPS (N$ cnt) 125 150 181 208 239 273

Growth 15.1% 20.2% 20.6% 15.3% 14.5% 14.5%

Advances growth 14.7% 16.7% 12.6% 10.5% 12.0% 14.0%

PROFITABILITY/VALUATION FY14 FY15 FY16E FY17E FY18E FY18E

NIM (avg. IEA) 4.8% 4.8% 4.9% 5.0% 5.0% 5.0%

ROE (%) 21.9% 22.4% 22.9% 22.6% 22.4% 22.2%

BVPS 617 728 856 990 1 145 1 323

Credit loss ratio 0.15% 0.26% 0.24% 0.28% 0.23% 0.23%

Cost-to-income 53.6% 51.6% 50.2% 49.7% 49.5% 49.3%

mailto:[email protected]

PSG Namibia 30 August 2016


INVESTMENT THESIS POWER The Power-score we give to companies conveys the strength of the sustainable competitive advantage we regard the company to have. We look at whether there is a clear and understandable business model and positive free cash flow. Power can be in cost advantages and having a hook in the customer. Qualitative thinking and quantitative evidence is used to determine the final score.

Understanding the business model

BWH is an investment holding company with a 100% shareholding in Bank Windhoek Ltd, Namib Bou (Pty) Ltd, Welwitschia Insurance Brokers (Pty) Ltd (sold after year-end), Capricorn Unit Trust Management Company Ltd (CUTM) and Capricorn Asset Management (Pty) Ltd (CAM). Bank Windhoek Ltd is one of the biggest commercial banks in Namibia. BWH also has strategic interests in Santam Namibia (28%) and Sanlam Namibia (29.5%). Following the listing of BWH on the NSX in June 2013, Capricorn Investment Holdings (CIH) has a 56.81% shareholding in BWH. The group offers a complete range of retail, business, corporate and investment banking, insurance and wealth management. BWH also has a 100% shareholding in CUTM (effective and CAM).

In analyzing the business model it is also very important to understand how Bank Windhoek Holdings is different from the other banks in Namibia. Nedbank, Standard Bank and FNB have South African parent companies where many of the decision-making is done. Certain functions, like debt collection, is also centralized. In Bank Windhoek, all decision-making is local and branch-based. Branch managers take responsibility for their branch’s loan age analysis and they know their customers very well. This enables them to make better character decisions of the individuals for the loans that are extended.

We can specifically see how this difference in approach translates into very low early arrears numbers for the bank.

Earnings growth

Specifically for BWH, earnings per share growth has averaged 19.8% over the last 5 years. The growth has been stable and predictable.

As can be seen from the table below, BWH has consistently grown net interest and non-interest income above 15% over the last 10 years.

Table 1: CAGR (%): Net Interest vs. Non-Interest

SBNH 1 year 3 years 5 years 10 years

Net interest income 15.1% 16.8% 16.8% 16.6%

Non-interest income 17.5% 22.2% 18.8% 16.0%

Source: PSG, Company data

Chart 1: HEPS growth


17.7%

25.0%

11.3%

24.7%

20.5%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

FY12 FY13 FY14 FY15 FY16

PSG Namibia 30 August 2016 Bank Windhoek Holdings Full year 2016 review

Bank Windhoek Holdings 3

Cost factors

One of the factors that determines whether a company has a sustainable competitive advantage is whether they have a cheaper process. For a bank this can relate to the cost-to-income ratio.

After peaking at 62.9% in 2010, this ratio has consistently come down and has improved to 50.2% in the 2016 financial year. This has been as a result of increased income but also a substantial curbing of operating cost growth in the last two years.

Chart 2: Cost-to-income


Operating Margin factors

Net interest margins (NIM) are cyclical in nature and typically track prevailing central bank interest rates. Note that our figures refer to Net interest margin after impairment on average interest earning assets (IEA). In the case of BWH, we have not seen a big endowment effect due to the nature of the funding taken on by the bank. When the prevailing interest rates increase, BWH can charge more on loans, but they also pay more for their funding.

In FY16 there was an increase of 65 bps in interest income on average IEA and an increase of 82 bps in the interest expense on average interest paying assets. We forecast that with the yield curve flattening out at the top of the interest rate cycle, the increase in interest expense will not be as large in FY17.

Chart 3: Net interest margins


Client base factors

BWH have managed to build close relationships with their clients and has a very localised, decentralised and personalised credit process. Decisions on credit are made by people who know the client. This makes these decisions more informed and is unique among the Namibian banks. Evidence for this is seen in the low early arrears numbers for BWH. BWH has early arrears figures of 0.8% of their home loan book, while the other banks are at 5% or higher. According to BWH it is a combination of factors, but has a lot to do with the market segment where they operate. There book is comprised mostly of the middle to upper income market. BWH is not as exposed to the part of the market where affordability becomes a problem with interest rate increases. The exposure is to the segment of the market that can absorb the increases.

62.8% 62.9% 61.4%57.9%

54.1% 53.6%51.6% 50.2%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30%

35%

40%

45%

50%

55%

60%

65%

70%

2009 2010 2011 2012 2013 2014 2015 2016

Cost-to-Income Growth Operating Cost

4.3% 4.6% 4.9%4.5% 4.4% 4.6% 4.7% 4.8% 4.8%4.8% 4.9%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

NIM Average repo



Chart 4: NPL ratio and bad debts


Credit losses have remained at very low levels and declined over the past year from 0.26% to 0.24% despite the rise in interest rates and the expected rise in non-performing loans.

Return on assets and equity

One of the indicative metrics of Power in a company is its long-term Return on Invested Capital. In a banking scenario, Return on Assets is more applicable.

ROA has increased consistently to 3.0% in FY16 as a result of small but continuous improvements in the expense ratio and asset utilisation by management. This means that more income was derived from assets which is also visible in the slight uptick in NIM.

Chart 5: ROA breakdown


Similarly, ROE has increased over the last four years from 21.9% to 22.9% at FY16. This is largely as a

result of the improved ROA with gearing declining over the period.

Chart 6: ROE breakdown


0.2% 0.2% 0.2% 0.2%0.3% 0.2%

1.1%

0.9% 0.9%

0.7%

1.1%

1.3%

0.0%

0.2%

0.4%

0.6%

0.8%

1.0%

1.2%

1.4%

FY11 FY12 FY13 FY14 FY15 FY16

Bad debt ratio NPL/Gross advances

7.22%7.42% 7.45% 7.52%8.05% 8.18% 8.23%

5.19% 5.29%5.17% 5.05% 5.29%5.35% 5.27%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

0%

2%

4%

6%

8%

10%

12%

2010 2011 2012 2013 2014 2015 2016

Asset utilisation (LHS) Expense ratio (LHS)

ROA (RHS)

2.0% 2.1% 2.2% 2.3% 2.5% 2.8% 2.8% 3.0%

20.8%22.1%22.5%23.1%

21.9%21.9%22.4%22.9%

3.5

4.5

5.5

6.5

7.5

8.5

9.5

10.5

11.5

0%

5%

10%

15%

20%

25%

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

ROA ROE Gearing (RHS)

POWER SCORE

4.5 out of 5



PEOPLE

The People-score we assign, relates to the way we think about management. We are entrusting the management of investors’ money to the people who manage the companies they invest in. They need to be good capital allocators of investors’ cash. Capital can be allocated in the following ways:

1. Growth capital expenditure 2. Acquisitions 3. Share buy-backs 4. Dividend payouts We want the management to have a good track record and determine whether their incentives are aligned so that they think like owners. We look for evidence in the numbers to support our views. If they set targets we look at whether management has a track record of reaching or exceeding targets.

The Board comprises 3 executive and 9 non-executive directors.

Chairman of the Board: Koos Brandt

BA LLB Non-executive director and founding member Chairman since 1996 Vice-Chairman of the Board: Johan Swanepoel

B.Com (Hons)(Accounting), CA(SA), CA(Nam) Non-executive director Appointed: 1999

Managing Director Bank Windhoek Ltd: Baronice Hans

BCom, B. Compt Hons (Unisa), CA (Nam) Appointed: 2016

Managing Director Bank Windhoek Holdings: Thinus Prinsloo

B Compt Hons, (CA (SA) Joined the CIH group: 2011 Appointed to BWH Board: 2013

The most recent change to the Board was the appointment of Baronice Hans as Managing Director of Bank Windhoek Limited in place of Christo de Vries whose contract expired. From February to June, Hans worked closely with De Vries and the executive management of the bank to ensure a smooth period of transition.

Remuneration structure

Fixed remuneration includes a basic salary and benefits in the form of membership to a pension fund to which contributions are made by the employer and employee and may include mortgage bond interest subsidies and housing allowances.

Variable remuneration are in the form of short-term incentives, which operates as a bonus pool in which all employees are eligible to participate and long-term incentives in the form of share appreciation rights.



In the 2015 annual report, the split between fixed and variable remuneration is not made clear, because fixed pay and bonuses are in one category.

Growth

Advances growth has slowed to 12.6% during FY16 in line with the slowdown in Private Sector credit extension. Over the past 10 years advances growth averaged 15.1%. We expect the slowdown to continue in FY17 with rising interest rates and pressure on economic growth.

Chart 7: Advances Growth (%)


Stricter credit guidelines from the Bank of Namibia in terms of mortgage lending for additional properties and deposit requirements for vehicle purchases will also dampen advances growth.

Chart 8: PSCE % y/y

Source: PSG, Bank of Namibia

Capital Structure

The bank remains well-capitalised with capital adequacy ratios above the minimum requirements from the Bank of Namibia. The liquid assets to deposit ratio has also increased in the time of rising interest rates and this is expected to continue going forward.

Chart 9: Capital adequacy


Chart 10: Liquid assets to deposit ratio


15.1%

0%2%4%6%8%

10%12%14%16%18%20%

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

Advances growth Average 10 yr

Jun-16, 12.1%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

PSCE Business Households

12.5%13.6%13.6%

12.6%13.2%13.4%

16.6%15.8%15.7%15.8%

0%

5%

10%

15%

20%FY0

7

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

11.2%

19.4%21.4%20.8%

18.4%18.7%15.9%

17.6%18.3%19.5%

0%

5%

10%

15%

20%

25%

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16



Management have diversified the sources of funding, which allowed for further advances growth without a reliance on significant deposit growth. In future they are looking to issue less debt and focus on growing deposits to bring the loan to deposit ratio down to 105%.

Chart 11: Loan to funding ratios


PRICE

12-month Rating Buy

Prior Neutral

12m price target (N$ cps) 2078

Prior 1869

Price (N$ cps) 1745

NSX: BWH

Current data and key metrics

52 - wk price range 1575-1760

Market Cap (N$m) 8 737

Shares outstanding (m) 501

Free Float 21%

P/BVx 2.0

Historical PEx (12 m rolling) 9.6

Common share equity (N$m) 4 274

BVPS (N$ cps) 856

Tier 1 ratio 14.4%

FY17E

Shareholders' equity (N$m) 4 955

BVPS (N$) 990

P/BVx 1.8

Forward PE 8.4

HEPS (PSG)

Cents From To %ch

FY17E 206.1 208.5 1.2%

FY18E 236.0 238.7 1.2%

FY19E N/A 235.1 N/A

We value banking shares using a three-stage dividend discount model with the terminal value determined by a justified price-to-book multiple. For the period where we have visibility, i.e the next 3 years we use the cash flow figures as derived by a bottom up approach with our financial forecasts to complete the first stage of the DCF. For the next two years, we use an interim growth figure and finally for the terminal value, a justified Price-to-Book multiple is computed using perpetual sustainable ROE, perpetual growth and our required rate of return The drivers for this valuation model can be explained by the below graphic:

93.6%

98.7%97.5% 96.9% 97.4%

93.3% 93.5% 93.9%

80%

85%

90%

95%

100%

105%

110%

FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E

Gross loan to total funding % Gross Loan to deposit %

PEOPLE SCORE

4 out of 5



We discuss each of these to guide the reader in their own analysis.

ROE

ROE is a function of asset utilisation and the expense ratio (ROA) and gearing.

Our forecasts are as follows:

FY16 FY17E FY18E FY19E

Asset utilisation 8.2% 8.4% 8.5% 8.5%

Expense ratio 5.3% 5.4% 5.4% 5.4%

ROA 8.2% 8.4% 8.5% 8.5%

Gearing 7.7 7.4 7.3 7.2

ROE 22.9% 22.6% 22.4% 22.2%

Asset utilisation (Total income/total assets)

Total income is expected to increase by 15.4% in FY17 with another 50bps interest rate hikes in the coming 12 months. This is based on our view that the US Federal Reserve will start increasing rates in September 2016 which should prompt the SARB to raise rates in order to protect capital flows. BWH have diversified their funding sources and as the yield curve flattens out, we expect them to gain more in the following year after taking strain with the differential in interest income and interest expense growth. Interest income growth is projected at 18.0% while interest expense growth is expected to come in at 20.6%.

Chart 12: Inflation and Repo Rate forecasts

Source: NSA, BoN

As at FY16, financial assets made up 7.4% of total assets. This percentage has gone up to as much as 14.9% in times of higher interest rates as banks buy financial assets instead of making doubtful advances. Our assumptions have this ratio peaking at 12% this time around because we do not expect interest rates to reach the levels it did during 2008 – 2010.

Gearing

Gearing is also expected to reduce as management indicated that they do not anticipate rolling out more senior issued debt but rather to focus on deposit growth.

ROE

The average ROE for BWH over the last 10 years was 24.0%. Over 5 years it drops to 22.4%. From our forecasts, we see that with the reduction in advances growth over the next 2 – 3 years, ROE might come under pressure. The average for our forecast for the next 3 years is 22.4%. Guidance

1. ROE

ROA

Asset utilisation

Expense ratio

Gearing2. Required

return

3. Long-term growth

Chart 13: ROE vs. Net Interest Margin


23.3%

21.9% 21.9%

22.4%

22.9%22.6%

22.4%22.2%

21.0%

21.5%

22.0%

22.5%

23.0%

23.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

FY12 FY13 FY14 FY15 FY16 FY17E FY18E FY19E

ROE (RHS) NIM



from management indicates that they target ROE of 20%. We have used a sustainable ROE into perpetuity (after 5 years from today) of 19% in order to compensate for future competition and disruption due to the advancement of financial technology.

Required return

We determine our required return using a build-up method which includes a risk-free rate, country risk premium, equity risk premium and a liquidity premium. Our required return for BWH is 14.75%, with the risk free rate calculated as the 10-year average of the 10 year South African government bond plus 100 bps spread.

Growth rates

The growth rates for the next 3 years are forecasted as follows:

Income Statement Growth FY16 FY17E FY18E FY19E

Total comprehensive income 20.1% 15.0% 14.0% 14.1%

Headline Earnings 20.2% 16.1% 14.4% 14.4%

Dividends 30.8% 23.7% 14.5% 14.5%

For the interim period from FY20 to FY21 we used 15%. The long-term growth figure into perpetuity used in the model is 10.5%. We calculated this number by using the long term (since 1980) real

GDP as reported by the World Bank and adjusted it by average inflation. Target price We value BWH at a target price of 2078 cps. Earnings per share growth is estimated at 15.3% for FY17. Dividends are forecasted at 73 cps which puts the share on a forward dividend yield of 4.2%. Recommendation BUY Upside scenario BWH could beat our expectations if ROEs remain at their current high levels. This can be achieved by increased advances growth and non-interest revenue growth in excess of our current forecasts. Downside scenario The property market in Namibia remains a risk factor and if credit losses sustained are higher than forecasted, ROEs can drop. There is also a possibility that this can dampen advances growth in the future since mortgage advances comprise half of total loans.

Sensitivity table This sensitivity table attempts to show what impact lower/higher sustainable ROEs and different growth rates can have for the target price of the share. We regard it as important to note that 85% of the target price is determined by the terminal value which is influenced by the ROE and growth rate. The extent of the sensitivity can be seen in the table.

Sustainable ROE into perpetuity Target price 20.78 15.0% 17.0% 18.0% 19.0% 20.0% 21.0%

Lon

g-te

rm

pe

rpe

tual

gr

ow

th r

ate

9.0% 12.36 15.42 16.95 18.48 20.01 21.54

9.5% 12.40 15.75 17.42 19.10 20.77 22.45

10.0% 12.44 16.14 17.99 19.85 21.70 23.55

10.5% 12.50 16.63 18.70 20.77 22.84 24.91

11.0% 12.56 17.25 19.60 21.94 24.29 26.63

11.5% 12.65 18.07 20.77 23.48 26.18 28.89

12.0% 12.78 19.17 22.37 25.57 28.77 31.96

PSG Namibia 30 August 2016


Bank Windhoek Holdings Ltd

Income statement (N000) FY14 FY15 FY16 FY17E FY18E FY19E

Net Interest Income (NII) 1 056 898 1 266 961 1 458 142 1 680 348 1 891 742 2 148 338

Impairment advances (29 115) (58 305) (60 779) (80 093) (72 725) (82 878)

Non-interest Income 679 732 811 891 953 804 1 108 511 1 280 722 1 481 641

Fee & Commission Income 493 301 568 324 686 739 817 219 964 319 1 137 896

Trading Income 47 263 97 427 143 071 157 378 173 115 190 427

Other non-interest 139 168 146 140 123 995 133 914 143 288 153 318

Operating cost (914 641) (1 042 231) (1 180 153) (1 345 374) (1 533 727) (1 748 449)

Pre-tax profits 878 289 1 067 142 1 269 542 1 470 227 1 683 531 1 927 924

Net Income attributable 624 915 753 002 905 048 1 043 861 1 195 307 1 368 826

Per share data FY14 FY15E FY16 FY17E FY18E FY19E

HEPS 121.00 150.9 181.8 208.5 238.7 273.4

DPS 44.00 53.0 66.0 73.0 84.0 96.0

BVPS cents 617.50 728 856 990 1 145 1 323

DY (%) 3.6% 3.3% 3.8% 4.2% 4.8% 5.5%

Pay-out Ratio 35.3% 35.4% 36.5% 35.0% 35.0% 35.0%

Profitability FY14 FY15E FY16 FY17E FY18E FY19E

NIM (Avg. IEA) 4.70% 4.8% 4.8% 4.9% 4.9% 4.8%

ROA (%) 2.60% 2.6% 2.8% 2.9% 2.9% 2.9%

ROE (%) 21.9% 22.4% 22.9% 22.6% 22.4% 22.2%

Productivity FY14 FY15E FY16 FY17E FY18E FY19E

Cost-to-income ratio 50.2% 48.1% 50.2% 49.7% 49.5% 49.3%

Cost/average assets 4.0% 3.9% 3.9% 3.9% 3.9% 3.9%

Compensation Ratio 28.3% 27.5% 27.9% 27.8% 28.0% 28.1%

Balance sheet (N$000) FY14 FY15E FY16 FY17E FY18E FY19E

Total assets 24 318 268 28 700 631 32 333 653 36 366 476 41 498 904 47 115 850

Total deposits 19 065 075 22 251 161 24 171 257 28 096 253 31 450 203 35 839 232

Gross loans 20 393 082 23 621 871 26 825 310 29 641 968 33 199 004 37 846 864

Specific impairment 86 887 95 576 144 323 159 477 178 614 203 620

Portfolio impairment 60 800 66 880 76 256 84 262 94 374 107 586

Net advances 20 245 395 23 621 871 26 598 023 29 390 815 32 917 713 37 526 193

Book value 3 094 158 3 643 373 4 274 039 4 954 638 5 731 729 6 621 626

Capital Adequacy FY14 FY15E FY16 FY17E FY18E FY19E

Tier 1 Capital 2 752 941 3 236 196 4 061 005 4 739 638 5 516 729 6 406 626

Total Capital 3 221 507 3 732 256 4 202 488 5 126 905 5 919 487 6 825 495

RWA year-end 20 395 703 23 621 871 26 598 023 28 965 903 32 407 818 36 914 319

Tier 1 ratio % 13.50% 13.70% 15.27% 16.36% 17.02% 17.36%

Total capital ratio 15.80% 15.80% 15.80% 17.70% 18.27% 18.49%

Equity multiplier (x) 7.90 7.90 7.70 7.44 7.29 7.17

Asset Quality FY14 FY15E FY16 FY17E FY18E FY19E

Bad debt ratio (%) 0.15% 0.26% 0.24% 0.25% 0.20% 0.20%

NPL 139 290 160 184 354 094 424 913 509 895 611 875

NPL/Gross Advances 0.7% 0.7% 1.4% 1.5% 1.6% 1.7%

Gross coverage 106.0% 101.4% 62.3% 57.4% 53.5% 50.9%



Liquidity FY14 FY15E FY16 FY17E FY18E FY19E

Gross loan-to-total funding 97.5% 96.1% 97.4% 93.3% 93.5% 93.9%

Liquid assets to deposit 17.6% 18.3% 19.5% 20.7% 23.2% 22.8%

Value (x) FY14 FY15E FY16 FY17E FY18E FY19E

Market cap/revenues 3.5 3.9 3.6 3.1 2.7 2.4

Market cap/deposits 0.3 0.4 0.4 0.3 0.3 0.2

P/E 10.0 10.6 9.6 8.4 7.3 6.4

P/B 2.0 2.2 2.0 1.8 1.5 1.3

DY (%) 3.6% 3.3% 3.8% 4.2% 4.8% 5.5%

Forecast returns

Current share price (CPU) 1745

12 month target price 2078

Forecast Price Appreciation 19.1%

Forecast dividend yield 4.2%

Forecast Stock return 23.2%

Market Return Assumption 14.8%

Forecast Excess Return 8.5%

Target Price vs Share Performance

9001000110012001300140015001600170018001900200021002200

Jun

-13

Jul-

13

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3

Sep

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Dec

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-14

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-14

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-14

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Dec

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-15

Feb

-15

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Ap

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Jun

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Dec

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-16

Feb

-16

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Ap

r-1

6

May

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Jun

-16

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16

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6

BWH Target price



Annex 1: Rating and Ratio Definitions

12 month Rating Definition

Buy Forecasted Stock Return is >6% above the Market Return Assumption

Hold Forecasted Stock Return is between -6% and 6% of the Market Return Assumption

Reduce Forecasted Stock Return is >6% below the Market Return Assumption

Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12months. Market Return Assumption (MRA) is defined as the one-year local market interest rate plus an implied the equity risk premium. Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are subject to possible change in the near term, usually in response to an event that may affect the investment case or valuation.

Equity Price Targets have an investment horizon of 12 months.

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Disclaimer This publication has been issued by PSG Wealth Management (Namibia) (Pty) Ltd (“PSG”), a member of the PSG Group Limited. It is confidential and issued for the information of clients only. It shall not be reproduced in whole or in part without our permission. The information contained herein has been obtained from sources which and persons whom we believe to be reliable but is not guaranteed for accuracy, completeness or otherwise. Opinions and estimates constitute our judgement as of the date of this material and are subject to change without notice. Past performance is not indicative of future results. This report is provided for informational purposes only. No information contain herein, no opinion expressed and no recommendation made constitutes a representation by us or a solicitation for the purchase of any of the securities mentioned herein and we have no responsibility whatsoever arising here from or in consequence hereof. Securities, financial instruments or strategies mention herein may not be suitable for all investors and investors must make their own investment decisions using their own independent advisers as they believe necessary and based upon their specific financial situations and investment objectives. The employees of PSG may from time to time own securities mentioned herein. Analyst Certification The research analyst who prepared this report certifies that the view expressed herein accurately reflect the research analyst’s personal views about the subject security and issuer and that no part of his compensation was, is or will be directly or indirectly related to specific recommendations or views contained in this report.

Member of the Namibian Stock Exchange Registration number: (98/528) Directors: Dan Hugo*, Hanli Jacobs, Isaac Kaulinge, Milka Mungunda, Willem Theron*, Brian van Rensburg * South African 5 Conradie Street, Windhoek, NAMIBIA PO Box 196, Windhoek, NAMIBIA Telephone +264 61 378 900 Fax +264 61 378901, E-Mail [email protected]

BANK WINDHOEK HOLDINGS LTD - PSG - BWH...PSG Namibia 30 August 2016 Bank Windhoek Holdings Full year...

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Transcript of BANK WINDHOEK HOLDINGS LTD - PSG - BWH...PSG Namibia 30 August 2016 Bank Windhoek Holdings Full year...