Mazi Asset Management chief investment officer Asanda Notshe picked Aspen Pharmacare, Investec, and MTN as his top three stocks at a recent JSE SA Stock Picks event.
Notshe has been a fund manager for over a decade and has almost 20 years of financial services experience in pensions, banking, and investment management.
He began his career as an actuarial analyst at Alexander Forbes Financial Services. Before joining Mazi, Notshe worked at Stanlib, heading up the product development division.
He has been with Mazi for 11 years and has worked as a senior portfolio manager, research analyst, and member of the executive committee.
Notshe identified three companies with sustainable business models and promising growth opportunities.
Aspen is a large-cap multinational pharmaceutical company and Africa’s largest drugmaker. Its headquarters are based in South Africa, with manufacturing operations on six continents.
In general, Notshe believes the healthcare sector offers attractive opportunities due to continuous advancements seen in the industry.
Notshe picked Aspen because of its integrated business model, which he believes makes it sustainable.
Aspen not only provides its own branded products but also has manufacturing capabilities in world-class facilities. The company is also involved in distribution.
Aspen also employs an interesting manufacturing strategy whereby it is expanding its interaction with other industry players. It does so by allowing these players to use Aspen’s facilities, allowing for more revenue and profit.
Notshe said the company also has a lower cost of debt in terms of its facilities, as it has been able to secure funding from multi-national lenders. This brings the company’s cost of debt down and increases the value for shareholders.
Notshe also approves of Aspen’s management group, which he believes has a sustainable mix of the company’s founders and corporate professional management.
Overall, the resultant prospects for Aspen are quite positive, and its current valuation is attractive, said Notshe.
The company currently has a price-to-earnings (PE) ratio of 13.45, and its share price is just over R170.
Investec is an international private banking and wealth management company based in South Africa and the United Kingdom.
Notshe said the company’s expansion in terms of clients, global expansion and partnerships make it an attractive stock pick.
Investec is a very selective company when it comes to its clients. However, according to Notshe, the company wants to increase its client numbers by expanding its criteria to include other professions, such as IT professionals.
In addition, the company’s private banking business in the UK has been steadily growing. It has also merged its wealth management business with UK-based investment management company Rathbones.
This partnership gives Investec a greater scope of clients and greater geographic reach.
These expansions open up new opportunities for the company and provide them with solid, organic growth opportunities, said Notshe.
He added that the company also has excess capital and has been buying back shares and returning excess capital to shareholders, making it attractive from an investment standpoint.
Investec currently has a PE ratio of 5.25, and its share price is around R105.
Local telecommunications giant MTN was Notshe’s third stock pick.
According to Notshe, the company’s exposure to a high-growth market makes it an attractive investment.
MTN is Africa’s largest mobile network operator, giving it exposure to markets that have seen very little penetration from the telecommunications industry. These markers allow MTN to grow even further as more subscribers come on.
In addition, telecommunication is becoming an increasingly integral part of people’s daily lives, said Notshe. Individuals, businesses, and governments use telecoms, giving the company sustainable growth opportunities across the continent.
MTN is also evolving its business model to include services like Mobile Money, through which users can transact through MTN’s platforms.
This allows the company to offer products and services through the same platform, opening up more opportunities for growth.
Notshe added that the company is also focused on “getting the right people on board” and said MTN’s management team is well-focused and executes its strategies well.
While MTN is open to risks from some of the markets it serves, it has done well to navigate these challenges, said Notshe.
Where MTN is trading now presents a perfect opportunity for investors, he added.
MTN currently has a PE ratio of 11.99, and its share price is around R125.