Alexander Forbes Group Holdings Limited (JSE: AFH) has demonstrated robust financial performance in its interim results for the six months ended 30 September 2023. With a 13% increase in operating income, AFH continues to benefit from successful acquisitions, client retention strategies, and higher average asset balances. This positive momentum translates to a 66% improvement in profit for the period, driven by factors like higher investment income and improved operational efficiency.
Furthermore, AFH boasts a strong balance sheet with a surplus above regulatory capital requirements and ample cash reserves. The group’s strategic acquisitions, including TSA Administration and OUTvest, position them for further expansion in the independent financial adviser market and the digital wealth platform space. Management remains optimistic about the future, with plans to invest in core strengths and launch a discretionary fund management capability in the latter half of the financial year.
Technical Analysis
On the 1-day chart, AFH’s price is currently trading higher at R6.29 following a recent break above the descending channel trading pattern. This bullish breakout suggests a potential for further upward momentum. The price action has also broken above the 50-SMA (blue line) and 100-SMA (orange line), indicating a shift in the short-term trend towards the upside.
However, the RSI (Relative Strength Index) is currently at 54.85, indicating that the stock might be nearing overbought levels. This suggests a potential for a temporary pullback before the bulls resume their ascent.
Short-term trading opportunities could arise if the bullish momentum sustains, potentially pushing the price towards the R6.60 resistance level. A breakthrough could further drive the price towards R7.00. Conversely, a downturn below the 50-SMA might exert bearish pressure towards the R6.00 support level, potentially testing the R5.65 support.
Summary
AFH’s impressive financial performance and strategic acquisitions paint a bright future for the company. The technical analysis also indicates the potential for continued upward movement.
With the current bullish momentum, the stock might aim for short-term gains towards R6.60 and potentially R7.00. However, vigilance is advised, as a bearish turn could drive the price towards R6.00 and R5.65 support levels.
Sources: TradingView, KoyFin, Reuters, Trading Economics.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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