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After its share price almost halved in a week, Capitec [JSE: CPI] blamed the weak rand and computer trading for the crash.
In a statement released on Thursday, it also denied market talk that the disruption caused by the coronavirus will have a disproportionate impact on its business.
"There is speculation in the market that Capitec will be severely impacted by Covid-19 due to the market on which it focuses and its unsecured credit business model," the company said. For its part, it "reminded" shareholders that only 9% of its clients have credit with Capitec, and that transaction fees and its income from funeral policies cover 91% of its operating expenses.
Also, it says that 81% of credit granted in August 2019 was to clients with a gross salary of over R10 000 per month, while almost half was to clients who earn more than R20 000 per month.
The company says that it still expects its headline earnings to increase by 18% for the year to end-February. "This guidance remains unchanged and Capitec’s fundamental business remains strong."
Capitec’s share price has fallen from above R1 290 at the end of last week to around R682 on Thursday. In a single session on Wednesday, the company's market valuation dropped R36 billion.
Capitec believes the share slump was triggered by international shareholders, who were motivated to sell the share as the continuing weakening in rand worsened their losses. On Thursday, the rand broke through R17/$ and closed at a record level.
Capitec also blamed computer algorithms which trigger selling when a share price falls beyond a specified limit.
