INVESTMENT CASE - INVICTA HOLDINGS LTD (IVT)

There are many gems to be found listed on the Johannesburg Securities Exchange. One such gems is a holding company called Invicta Holdings Ltd (IVT) which owns a very interesting portfolio of companies. The major assets of IVT are companies like Bearing Man Group (BMG) and Capital Equipment Group, positioning IVT to benefit from the daily business activities and expansion of industries like mining and farming. Both industries, regardless of the short term headwinds, are going to be around for a very long time. People will continue to need; Gold, Platinum, Iron, Mielies and Wheat, and therefore, IVT will continue to be in a favourable position as a major supplier of capital equipment and spare parts to these industries.

In the last full year financial report released in March this year, IVT reported that it had a 24% increase in revenue and 21%, 38% and 40% increase in profit, earnings per share, and dividend distributions respectively. Make no mistake, these results are no less than absolutely stellar.

Since these results have been released, two interesting events have taken place. First, there is the 100% acquisition of Mandrik. A transaction that is actually not even big enough to require being reported, although the great management team of IVT insisted on making it public as the company feels that this acquisition will do well to compliment the business of BMG. It would seem that the management team on IVT is thinking of both economies of scale and scope. Second, the bid to buy Singapore based Kian Ann Engineering for R 1.32bln and forge a presence in Asia. IVT has stated that it expects this particular acquisition to boost revenue by up to 20%.

Taking the above into account, the investment case becomes clear. Our attention now turns to the price chart and technical analysis. Below is a weekly chart which indicates that a very strong longer term up-trend is in place. Also that the share is now trading in the region where one could start thinking about buying it and finally, there is a symmetrical triangle price formation, which is usually regarded as a trend continuation pattern.

IVT - Weekly Chart

Looking at a shorter time frame below, we look at the daily chart which once again points out that symmetrical triangle price formation. This gives us as investors two options; we can either wait for the break of that price formation and buy shares once the price has broken out at around R82.00 a share, or we can try and buy some at R78.50 in a attempt to maximise the potential profits. 

IVT - Daily Chart

Since this is a longer term outlook, we believe that either one of these entry prices will do.