SSA’s top 30 firms see 6.7% rise in market cap to $78.7bn in April

Nigerian listed companies lead ranking, excluding South Africa

THE TOTAL MARKET CAPI TALISATION of the top 30 companies in sub-Saharan Africa, excluding South Africa, hit $78.7 billion, rising 6.7 percent year to date as of April 2021 and also climbing 3.4 percent or $5 billion from the $73.7 billion reported in March 2021, a recent report by African Financials obtained by Business A.M. shows.

During the month of April, stock markets across the SSA region, excluding South Africa, rose 4.4 percent and 2.3 percent year to date with Kenya, Ghana, and Nigeria exchanges outperforming their sub-Saharan African counterparts by 8.1 percent, 16.1 percent, and 2.2 percent growth in the benchmark with no falls recorded by any market during the month. Similarly, six of the fourteen stock markets across the region, not inclusive of South Africa, have positive dollar returns year to date.

A closer analysis of the data revealed that Nigeria, behind South Africa at $974.3 billion in market cap, boasts of $42.5 billion in market cap as of April 2021 while Kenya ($23.4 billion), Côte d’Ivoire ($7.1 billion), Mauritius ($5.0 billion) and Ghana ($4.4 billion) all had major contributory values to the regional stock market, excluding South Africa. The report from African Financials also revealed that the region’s stock markets indices in United States dollar terms have been lifted by the recovery in Nigeria, but are still at support levels going back to 2004, thus, it rose 4.4 per cent in April and up 2.3 per cent year to date.

According to the report, the top 30 companies in subSaharan Africa, ranked by market capitalisation, have Kenya’s Safaricom ranking top with a market cap of $14.99 billion as listed on the Nairobi Stock Exchange as at April 2021, while its share was priced 40.35 Kenyan shillings in the local currency. Nigeria’s Dangote Cement, with a dividend cover of 1.01 and price to book value at 4.22, was number two on the log with a market cap of $9.05 billion as listed on the Nigerian Exchange, and was priced on the exchange at 217 Nigerian naira.

Sitting third on the log is Africa’s technology and wireless carrier, MTN Nigeria, which was priced at 174.90 Nigerian naira. MTN Nigeria, which was listed by introduction on the Nigerian Exchange in 2019 had its market cap at $8.71 billion. Bua Cement, a major player in the Nigerian and African cement manufacturing space retained its fourth position for the second year going, with a market cap of $6.45 billion, 2.2 percent in dividend yields, 18.8 return on equity (ROE) within the last twelve months and the market share price at 77.9 Nigerian naira as at end of April 2021, while Airtel Africa, a leading telecoms giant in 14 countries and mobile money service provider listed on the Nigerian and London Stock Exchanges had a share price of £0.76, $3.95 billion in total market cap across African Exchanges, with its price to book value at 1.17 made the list of the top 5 among the top 30 companies.

Furthermore, food and beverage company, Nestle Nigeria, MTN Ghana, ecommerce giant, Jumia Technologies, Helios Towers, and Sonatel, all joined the list of the top 30 companies ranked by market cap in sub-Saharan Africa, excluding South Africa, with market caps at $2.75 billion, $2.43 billion, $2.39 billion, $2.37 billion and $2.36 billion, respectively. Also, Nigeria’s top lending financial institutions Guaranty Trust Bank (GTB) dropped to the eleventh position, from ninth a year ago and seventh two years earlier, with its market cap at $2.16 billion, followed by Zenith Bank in fourteenth position with a market cap of $1.71 billion as at April 2021.

Nigerian companies continue to lead the African market scene with almost 50 percent (13 companies) share among the top 30 companies and ranked by their respective market caps as found on the respective exchanges across the region as the likes of Stanbic IBTC ($1.36 billion) at 17th, Nigerian Breweries ($1.07 billion) at 21st, Lafarge Africa ($873 million) at 22nd, Seplat Petroleum ($793 million) at 23rd, Access Bank ($635 million) at 28th, while United Bank for Africa ($611 million) and First Bank of Nigeria with $606 million, were ranked 29th and 30th respectively.

A further analysis from the African Financials report also shows that the historic Price/Earnings ratios were well above their March 2020 lows and Price/Book ratios had risen. Dividend yields had fallen back from multi-year highs as markets rose and as some companies reduced or passed their dividends in response to Covid-19. As of the end of April 2021, 21 companies with December year ends had reported full-year 2020 results, with earnings down 11 per cent.

Meanwhile, the region’s valuation analysis as highlighted in the report shows that investors reward high return on equity (ROE) handsomely with a strong correlation of ROE and Price/Book value.

In their observations, from the banking and finance index, investors in December 2020 began rerating Nigerian banks and found two banks were trading at a premium to nonNigerian banks (GTB and Stanbic IBTC). Nigerian banks are at a big discount to the region’s other banks. For example, First Bank Nigeria has a 67 percent discount to book value. However, African Financials said investors should note that GTB in London is at an 8 percent discount to the NGX share price.

Also in the industrial and commercial companies sector, the report observed that: Nestlé Nigeria, MTN Nigeria both have high Price/Book to ROE ratios and could be vulnerable should earnings disappoint. East African Breweries Limited (EABL) has been hit by Covid-19 and earnings are just above breakeven. BUA Cement and Tanzania Cigarette look overvalued relative to their ROE. Investors should note the big discounts on duallisted Nigerian stocks in London: (i) Airtel Africa, a 52 percent discount and (ii) Seplat Petroleum, a 21 percent discount.