Dylan Bradfield, portfolio manager at Sharenet
BUY: MOMENTUM
Assurance group Momentum recently released its half-year numbers, with normalised headline earnings up 12% to 274.9c a share and the interim dividend up 29% to 110c a share. Its capital markets day confirmed that its strategy for financial 2027 was likely to be reached in the current financial year. This includes a return on equity already at 23% and cost savings on track at R800m. The balance sheet is strong and supports share buybacks.
Some headwinds remain, with the value of new business (VNB) run rate behind target (only R347m in nine months). Recovery will rely on higher-quality sales rather than cost cuts. The stock is down 11% from its highs.
Momentum sits on a current earnings multiple of 8.3, while the forward multiple (based off consensus earnings numbers of 516c a share) is at 7.1, which we deem a cheap entry relative to peers.
SELL: SANLAM
Assurance giant Sanlam’s share price has dropped over 20% from its March year-to-date highs after delivering headline earnings down 18% for the year ended December 2025. Actual numbers were better on the whole, but weak pan-African business (down 25%), start-up losses at Lloyd’s and a one-off Santam provision of R920m blurred investor optimism. Dividends were up 9%, but 1% below forecasts.
Overall, VNB was down by 21%, with low margins confirming that the fourth-quarter volume spike was “low-margin savings business”. Solvency dipped on lower bond yields, while embedded value of R87.73 a share came in below forecasts due to conservative India nonlife carrying values and a lower Sanlam-Allianz joint venture valuation.
Sanlam trades on an earnings multiple of 11.1 with a forward multiple of 9.4 (based off 883c a share consensus earnings numbers), which we view as moderately fair.
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