Invicta released its full year results today, receiving a muffled response from the market, with its share price dropping on the back of the results. Despite the market’s reaction to the results, Arnold Goldstone, CEO of Invicta is of the view that the company will continue to produce profits along the same trajectory in the future and is optimistic about the company’s growth. Another entity that has been in the spotlight of late, is Telkom, experts have mixed views on the company and whether or not it is a sound investment pick. Viv Govender, from Vunani Private Clients, gives his insights into the market movers for the day, particularly looking at Invicta and Telkom in light of the current positions they hold in their respective industries. – LF
ALEC HOGG: Let’s get a more in-depth view of the market today and the way it’s trading. Viv Govender from Vunani Private Clients 
joins us now. We do see some interesting moves on the markets today – Telkom powering ahead – I’m not sure whether, the last time you were in this studio, you were one of those who had given it the thumbs up but certainly, there are some investors who are still climbing aboard this bandwagon
VIV GOVENDER: I do think it’s a very good idea to look at the company, not just in terms of where it’s been but also in terms of where it is relative to its competitors. Look at Telkom’s market cap; it’s at round about R23bn at the moment. If you look at something like Vodacom or MTN, they’re basically ten or even 20 times larger than Telkom. If you’re looking at the possibility of growth rates, don’t just look at what it is because a few months ago it was sitting at around less than R10bn in terms of market cap, but look at what its competitors are doing. Some of the movements seen recently from fixed line operators would make us believe that there is a more activity happening there – maybe a bit more managerial competence coming through. The asset that it has on the management – the fixed line infrastructure of the company etcetera – makes it potentially a much more valuable company than it is right now.
ALEC HOGG: Invicta’s results were out today. That’s been a spectacular performer; a rerating on the market on the one hand, and strong growth in earnings in the last five years has seen the share price go up six-fold. We had Arnold Goldstone – the CEO – in the studio a little earlier. He says he’s getting into his second breath now (or the second run). He’s on a 13.5 PE. Is this one that’s maybe had its run as far as you’re concerned?
VIV GOVENDER: Yes, the market wasn’t particularly pleased about numbers. The stock is down just over two percent at the moment and it has had trouble breaking through at about the one-twenty-five level. It did briefly go up above…the optimum is 130, but if you just look back about a year ago, it had a nice strong movement from 95 up to about 115 to and it was holding between the 150 to 130 range. As of the last few months, it’s been 120/125. The fact that they’re looking at acquisitions is obviously something that the market never likes. I don’t think that most of the markets watchers have much faith/belief that the CEO’s or management have the ability to make value-adding acquisitions to the business. That’s obviously one of the things that’s making things look a bit negative at the moment.
ALEC HOGG: We heard from the Financial Services Board that Dawood Seedat, who previously worked at SARS and worked at the National Prosecuting Authority, has left with immediate effect after allegations of corruption. I know you’re much closer to this kind of stuff in the markets Viv, but it doesn’t send a good message.
VIV GOVENDER: It’s never a good thing when you have the chief honcho having to leave under such troubling circumstances, especially when one considers the fact that when a service is bought, make sure that we have…the other financial service providers out there…things like specific banks or even smaller companies – specific providers – are walking the straight and narrow. When the policeman is found to be corrupt, it’s much more egregious for a policeman to be corrupt as opposed to one of the people that he’s monitoring. It is very troubling. It does reduce some of the coffers that we have in the system, which is a shame. South Africa’s financial system is probably one of the top five regulated systems in the world.
ALEC HOGG: It is indeed. Viv Govender is from Vunani Private Clients.
