Our opinion on the current state of SYG

5 de dez. de 2023

Sygnia (SYG) describes itself as a "specialist financial services group". It is South Africa's largest provider of exchange traded funds (ETF) and has a number of unit trusts. The company has R217,7bn under management and appears to be taking market share away from other asset managers. Sygnia Itrix makes it possible for Sygnia to attract funds looking for offshore exposure. In its results for the year to 30th September 2023 the company reported assets under management (AUM) up 11,6% at R318,1bn and revenue up 4,3%. Headline earnings per share (diluted) was up 4,5%. The company said, "Our retail business is a key growth driver and has attracted net inflows of R1.0 billion for the 2023 financial year (2022: R5.3 billion). The slowdown in net growth is a function of outflows related to market conditions, such as emigration, the need for solar power installations and cost of living increases." The share drifted down for most of the past 4 years, entered a sideways market, and culminating in a low of 701c on 23rd April 2020. It then entered a strong new bull trend rising to 2099c in March 2021. Since then it has been drifting sideways, but a new upward trend is emerging. It is on a P:E of 9,84 - which looks like good value. The fact that Sygnia was able to increase assets under management during such a challenging time, indicates that it has caught the attention of fund managers. The company's revenue is a function of its ability to continue to attract funds for management. We believe that this company could be quite similar to Coronation in early 2012 - when that company was relatively cheap and subsequently grew four-fold. On 25th March 2021, the company announced that Magda Wierzycka would step down as CEO with effect from 31st May 2021 and David Hufton would assume her role. Wierzycka was to remain on as a non-executive director. Subsequently on the 9th of June 2021 the company announced that she would be appointed as executive chairman of the company.