Fundamental Overview:
Ninety One Limited (JSE: NY1) confronts market challenges amid a decline in fiscal H1 profit and revenue. The company reported a decrease in profit after tax to £79.3 million for the six months ending Sept. 30, down from £84.7 million in the prior year. Revenue fell to £350.2 million from £384.3 million.
The decrease in Assets Under Management (AUM) by £6.5 billion, alongside net outflows of £4.3 billion, reflects broader economic challenges. The CEO, Hendrik du Toit, attributed the decline to heightened global interest rates and geopolitical uncertainty, impacting investor interest in emerging markets and public equities.
Despite the hurdles, Ninety One remains resilient, cutting its interim dividend to 5.9p per share. The company’s commitment to cost discipline and client service reflects its determination to navigate the challenging market conditions. The stock experienced an uptick after the announcement, showcasing investor confidence despite the profit drop.
Technical Analysis:
The current price for Ninety One stands at R42.00, exhibiting a flat trend within an ascending channel pattern. Notably, the price trades above the 50-SMA (blue line), 100-SMA (orange line), and 200-SMA (red line) moving averages. The flat-sloping 200-SMA remains above the 50-SMA and 100-SMA, signifying a bullish bias. However, caution is warranted as the RSI is at 69.61, approaching overbought levels.
Potential short-term trading opportunities towards the R42.78 price level could arise should the bulls sustain a push higher. A break above the initial resistance could confirm the bullish momentum, likely bringing the R43.68 and R44.67 resistance levels within the bulls’ reach in the short term.
However, with the RSI trading around the overbought levels, there is potential for a short-term pullback towards the 23.60% Fibonacci retracement level at R41.10. A break below the initial support could trigger a run lower and would likely bring the R40.06 and R39.22 support levels into play.
Summary:
Ninety One Limited faces headwinds stemming from declining fiscal H1 profit and AUM amid market challenges. Technically, the stock portrays bullish signals on the 1-day chart, trading above key SMAs.
However, the proximity of the RSI to overbought levels suggests a potential for short-term pullbacks. A sustained bullish move may see the stock aiming for R43.68 and R44.67, while investors should monitor R41.10 and subsequent supports in case of a downturn.
Sources: TradingView, Dow Jones Newswire, Harmony Gold Mining Company, Investing.com, Reuters, MT Newswire, PR Newswire, Seeking Alpha, BusinessLive.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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