The 2014 Emerging EMEA Research Team: Southern/Sub-Saharan Africa Equity Strategy, No. 1: John Morris & team

John Morris
& team
Bank of America
Merrill Lynch

First-Place Appearances: 3

Total Appearances: 4

Team Debut: 2011

For a second consecutive year, and the third time since 2011, Johannesburg-based John Morris, 54, steers his two-person crew at Bank of America Merrill Lynch to first place on this list, garnering plaudits for both their customer service and the quality of their coverage. “John and his team integrate global research into the local market,” remarks one fund manager, applying “a wide breadth of knowledge from individual stocks through complex global investment drivers and themes.” South African hospital operator Netcare is among the strategists’ favored names. The stock is trading at a discount to its peers, and management’s refinancing of the health care company’s U.K. property holdings should resolve a “long-term overhang,” Morris explains. Their price objective is 32 rand, representing an 11.9 percent premium to the shares’ late May value. The researchers, however, remain bearish on African Bank Investments. They have been warning investors to avoid the South African lender since May 2012, citing such concerns as the growth profile of unsecured-credit providers after a period of accelerated expansion, the threat of possible regulatory intervention, heightened competition and an alarming level of bad debts. Indeed, Morris notes, African Bank stumbled significantly in the fiscal year that ended in September, posting a loss of 1.5 billion rand ($141.6 million), compared with a gain of 1.2 billion rand in the previous year, on an earnings decline of 88 percent, to 365 million rand. The shares slumped 31.8 percent over the 12 months through May, to 8.40 rand, while the broader market climbed 8.7 percent, and the BofA Merrill troupe expects them to fall to 7.70 rand.