Directors’ Deals: Investec directors cash in

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It is no secret that banks have had an excellent year so far, with higher rates and wide lending margins helping improve their profitability. While far below their 2007 peaks, share prices are staging a firm recovery. 

Ruth Leas, chief executive of Investec bank, the main subsidiary of Investec, the South Africa and London-based lender and wealth manager, used the end of the lock-up period following the company’s last set of results to cash in more than £420,000-worth of shares. Meanwhile, group chief financial officer Nishlan Samujh and executive director Ciaran Whelan sold £885,000 and £1.34mn-worth of shares respectively.

Investec’s hybrid structure and dual listing have historically made it a difficult share to categorise. But after spinning off its asset management arm in 2020 and seeing its UK wealth business merge with Rathbones last year, the bank’s bread and butter is now its corporate and other specialist banking services for mid-market clients in the UK and South Africa.

While the shares have done well over the past 12 months, up by around a third, the year-to-date price move has been less impressive. Larger and more focused banks have attracted more attention this year, probably because of a series of unprecedented share buybacks. By contrast, Investec is certainly not the biggest buyer of its own shares.

Still, could its unique structure play to its advantage? On the home front, the news from South Africa is slightly more encouraging, albeit the expected coalition government has yet to materialise. After last month’s general election, the once dominant African National Congress is attempting to agree to a pact with the main opposition to remain in power and sideline its more radical cadres. 

The country faces many problems, but Investec’s wealth and corporate banking business has benefited from a rising class of local entrepreneurs from across Africa. If the government can sort out endemic corruption and tackle some urgent infrastructure issues, particularly power generation, then Investec can benefit from its position in a rapidly developing continent.

Brickability manager builds stake

The recovery in the share prices of many UK building materials producers and merchants seems to have run out of steam recently, as central bank decisions on interest rate cuts have been pushed back and companies continue to report fairly humdrum numbers. 

The FTSE 350 Construction & Materials segment has generated a total return of 14 per cent since the start of the year, almost double that of the 7.8 per cent generated by the broader index. However, it has fallen back by about 3 per cent from last month’s peak, the concern being that the market was getting ahead of itself in valuation terms.

The spring forecast from the Construction Products Association expects a further 2.2 per cent decline in output this year, with few signs yet of an improvement either in private housebuilding or the home improvement market.

Brickability hasn’t been the only company in the sector to report “subdued” activity, with lower demand pushing both sales and adjusted cash profits down by 13 per cent in the year to March. 

And yet, there are signs of green shoots. Purchasing managers’ index data for May showed the UK’s construction sector grew both for the third month in a row and at the fastest pace for three years.

Companies in the sector are “gearing up for further growth in the months ahead”, increasing orders and adding more staff, according to Andrew Harker, economics director at S&P Global Market Intelligence.

Brickability’s Douglas Bryce, who manages the company’s contracting arm, seems to think its fortunes are improving. He bought £268,000-worth of shares on June 14. The shares currently trade at 7.6-times FactSet’s consensus forecast of around 9p for its current financial year, which is below both their five-year average and peer valuations.

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