Investment Column: Investec is moving on the right track, buy

Great Portland Estates; Cape

Our view: buy

Share price: 470.4p (-16.7p)

There was much to like about the results from Investec, the Anglo-South African banking and fund management group. The company's asset management business has been performing rather well, with an overall 9 per cent rise in full-year operating to £432m, a strong rise in assets under management, and a near 25 per cent hike in the total dividend for the year – which came in at 16p against 13p last time and is more than two times covered by earnings.

The company appears to be in fairly good health, while a shift in the business mix from lending to asset management, at a time when deposits are rising sharply, is also to be welcomed from a banking group.

That appears to be where the long-term future lies for the company, which now, as JP Morgan Cazenove has noted, refers to itself as "a specialist bank and asset manager". Clearly, there is an intention to grow the fund management and wealth management businesses, and if Investec can keep up the pace that's probably no bad thing.

Investec remains cautious about the UK economy – managing director Bernard Kantor is not alone in predicting a "slow, grinding" return to growth in Britain, but the South African end of the operation might do a bit better than this, assuming that country can maintain a degree of political stability and ensure that the World Cup goes off successfully. Neither is a certainty, but we can but hope.

The shares have been steady, if unspectacular, performers in recent months, but we think there are grounds for optimism.

Trading on a forecast multiple of just under 10 times, against a long-term rate of about 11.8 times, they look to offer decent value if the company can continue its progress and if its loan losses remain on the downward trend they were showing in yesterday's statement.

We think they should be solid performers from here, so buy.

Great Portland Estates

Our view: Buy

Share price: 300p (+2p)

Anyone with an interest in commercial property will have noted a slew of company results this week, which have signalled a sector-wide return to health.

Yesterday was the turn of Great Portland Estates, which followed the likes of Land Securities and British Land with a healthy rise in net asset value per share. The company managed to grow this 15.5 per cent over the last 12 months, the first time it has recorded an increase in three years. It announced a dividend of 8p, which will no doubt be appreciated even if the yield is still a rather feeble 2.2 per cent. Nonetheless, commercial property rents and values have surged in recent months after the dark days of the credit crunch. Luckily for Great Portland, which has been investing in the capital, it is the London market that has seen the greatest improvement.

We have been encouraged by what we've heard from rivals, and after a 2009 that saw Great Portland asking investors for more money through a rights issue, and sizeable share price falls, we are now happy that the group has its house in order. We also liked its focus on London, and analysts certainly seem to feel the capital will be strong over the next couple of years. Great Portland also has the advantage of having one of lowest loan-to-value ratios in the property sector, along with £477m in undrawn facilities to push into the market. It's time to buy.

Cape

Our view: Buy

Share price: 205p (-19.25p)

There was good news from energy services group Cape's interim management statement yesterday, which was published to coincide with its AGM. Trading has been in line with forecasts over the last year, and the board is similarly confident about the year ahead – pointing out that with half the group's revenues from essential maintenance spending, and the other half mainly from multi-year contracts, Cape has an unusually clear view of future revenues.

Its global portfolio is also a big help, with strong performance from the Far East/Pacific Rim businesses offsetting lower activity levels in the Middle East due to the completion of a number of major projects in the region last year. Martin May, the chief executive, described performance as "a solid start to the year" – and we can't disagree.

Cape's stock has rocketed since the post-Lehman market slump, soaring to pre-crisis levels by last September although seeing some volatility since. But the group's financials are in good shape: with net debt set to fall below £70m, it will leave the forward net debt-to-earnings ratio at 0.8 times, according to Panmure Gordon.

With defensive=looking revenues, and at a time of increasing contract wins, we see a compelling investment case. Buy.

Sport
Alexis Sanchez has completed a £35m move to Arsenal, the club have confirmed
sportGunners complete £35m signing of Barcelona forward
Voices
Poor teachers should be fearful of not getting pay rises or losing their job if they fail to perform, Steve Fairclough, headteacher of Abbotsholme School, suggested
voicesChris Sloggett explains why it has become an impossible career path
Sport
world cup 2014
Sport
Ray Whelan was arrested earlier this week
PROMOTED VIDEO
Arts and Entertainment
In a minor key: Keira Knightley in the lightweight 'Begin Again'
film
Arts and Entertainment
Celebrated children’s author Allan Ahlberg, best known for Each Peach Pear Plum
books
News
peopleIndian actress known as the 'Grand Old Lady of Bollywood' was 102
News
Wayne’s estate faces a claim for alleged copyright breaches
newsJohn Wayne's heirs duke it out with university over use of the late film star's nickname
Life and Style
It beggars belief: the homeless and hungry are weary, tortured, ghosts of people – with bodies contorted by imperceptible pain
lifeRough sleepers exist in every city. Hear the stories of those whose luck has run out
News
Mick Jagger performing at Glastonbury
people
Life and Style
fashionJ Crew introduces triple zero size to meet the Asia market demand
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Sport
Santi Cazorla, Mikel Arteta and Mathieu Flamini of Arsenal launch the new Puma Arsenal kits at the Puma Store on Carnaby Street
sportMassive deal worth £150m over the next five years
Arts and Entertainment
Welsh opera singer Katherine Jenkins
musicHolyrood MPs 'staggered' at lack of Scottish artists performing
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Arts and Entertainment
Currently there is nothing to prevent all-male or all-female couples from competing against mixed sex partners at any of the country’s ballroom dancing events
Potential ban on same-sex partners in ballroom dancing competitions amounts to 'illegal discrimination'
News
business
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Business Analyst Consultant (Financial Services)

£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Systems Administrator - Linux / Unix / Windows / TCP/IP / SAN

£60000 per annum: Harrington Starr: A leading provider in investment managemen...

AVS, JVS Openlink Endur Developer

£600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...

Technical Support Analyst (C++, Windows, Linux, Perl, Graduate)

£30000 per annum: Harrington Starr: A global leader in trading platforms and e...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice