Is Capitec still overvalued?

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Articles:

Ghost Bites: Capitec is growing in the mid-teens and the market loves it, but isn't that already priced in? Sasol gets even worse. There's a flurry of mining updates from Anglo American, Amplats, Kumba and Orion. Also check out Ascendis and Trustco. Read Ghost Bites, with thanks to Fedgroup.

Dominique Olivier: Perspectives on the quartz crisis in Switzerland in the 1970s and how industries are disrupted. Read it here>>>

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Local company news:

Ghost Bites is brought to you by Fedgroup.
Capitec saw a strong rally on the market yesterday after releasing numbers that show how well the group is doing. The funny thing is that if you look over a few years, the juicy operating margin expansion has slowed down. Yes, they are building out infrastructure for growth, but can that earnings growth rate increase from here? The valuation suggests that it must, yet the market continues to celebrate every bit of good news - even the stuff already priced in.
At the other end of the spectrum when it comes to market love, we find Sasol. Local production issues and pressure on international chemical prices continue to create an ugly situation at the company. The market has been dumping the stock.
In mining, there are updates from Anglo American (interesting copper and diamond news in there), Anglo American Platinum, Kumba Iron Ore (prepare to be depressed by Transnet) and Orion Minerals.
Over at Ascendis, shareholders have approved the resolution that paves the way for a delisting. The company has also commented on the TRP investigation. And finally, there's a deal at Trustco to increase the stake in Legal Shield Holdings.
Get the details in Ghost Bites at this link>>>

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Of course, the talk of the town last night was Tesla, the tech company that I have always believed was just a car company that went to private school. With all the price cuts to move stock and a lot of pressure on the share price, I think that the valuation still has plenty of downside risk. Of course, this didn't stop the market from desperately looking for some good news to give the stock a bounce, sending it 13% higher in after-hours trading despite missing estimates on revenue and earnings.
Perhaps the market latched onto the news of more affordable vehicles that would help Tesla fully utilise its current production capacity. Either way, please do tell me again about the premium technology that makes Tesla so special vs. competitors? Price cuts don't sound very premium to me.
Meanwhile, Volvo reported an 8% increase in operating profit in its quarter despite a 2% decrease in revenue. A new all-time sales record was set in March. The combination of higher volumes and lower revenue tells you about the pricing pressure in this sector. Sadly, Tesla bulls tend to forget all about competition.

READ: Tick tick boom - perspectives on the quartz crisis
(by Dominique Olivier)

Macroeconomic Update

The US dollar retreated yesterday after weaker PMI data. The market is now looking ahead to tomorrow's Q1 GDP number and Friday's personal consumption expenditure data. Over in Japan, the yen is near the weakest levels in 34 years as markets await the Bank of Japan's MPC meeting on Friday.
The rand is consolidating in the R19.00 to R19.25 range, although any surprises in the data releases could change that.
Gold and PGMs are stronger this morning, while base metals have opened flat. Brent Crude is trading marginally higher at $88.58.
Key indicators: USD/ZAR R19.09; US 10-year 4.62%; Gold $2,326; Platinum ZAR R17,497; Brent Crude $88.46
This macroeconomic update is based on TreasuryONE's morning update.