Shares Decline Despite ADVTECH’s A+ Report

Following ADvTECH Limited’s (JSE: ADH) earnings release, the stock witnessed a downward trajectory despite reporting commendable financials. The company showcased robust performance metrics, with revenue up by 13% to R7.86 billion, driven by good enrolment growth across schools and tertiary divisions and a noteworthy 20% increase in EPS to R1.74. However, despite these positive fundamentals, market sentiment appears to have been impacted negatively, potentially due to profit-taking following an impressive 70% 52-week appreciation and concerns over future growth prospects. 

ADvTECH’s growth narrative, particularly in Africa, has been a key driver for investor interest, with the company experiencing good student enrolments and revenue growth across its education divisions. Nevertheless, the retirement of CEO Roy Douglas and subsequent leadership transition may have introduced an element of uncertainty, influencing investor sentiment. 

Technical Analysis  

Despite the positive fundamentals, ADH’s share price tumbled following the earnings release. This could be attributed to profit-taking after a stellar run that saw the share price appreciate over 15% year-to-date and over 70% in the past year. 

The technical picture remains bullish overall. ADH is currently trading within an ascending channel above key moving averages, with the key moving averages [50-SMA (blue line), 100-SMA (orange line), and 200-SMA (red line)] all sloping upwards in a bullish configuration. Additionally, the RSI (63.97) sits comfortably above 50, indicating further upside potential. 

If the bulls can regain control, a sustained push higher could bring the recently reached all-time high of 3,000 cents into focus. Further bullish confirmation would come from a breakout above this level on strong volume, opening the door to the 23.60% and 38.20% Fibonacci extension levels (around 3,112 and 3,181 cents, respectively). However, short-term caution is warranted. The recent price dip could see the stock retest the 2,751 support level, which coincides with the 20-SMA. A break below this level, accompanied by significant volume, could signal a shift in sentiment and potentially lead to a test of the 2,595 and 2,381 support levels. 


ADvTECH’s strong fundamentals paint a bullish picture for the long term. However, the recent price drop suggests a potential short-term correction. The market could closely monitor the reaction of the price action to around the 2,751 cent support level. A break above the ascending channel, backed by strong volume, could see the share price retest its all-time high of 3,000 cents. Conversely, a sustained break below the 2,751 cents level could indicate a trend reversal, with the next potential support levels at 2,595 cents and 2,381 cents. 

Sources: TradingView, ADvTECH, SimplyWallStreet, BusinessTech, Business Live. 

Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst 

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