5 BIG BUSINESSES IN SOUTH AFRICA LISTED IN THE JSE

Have you ever wondered what are big companies that are listed in the JSE, Well wonder no more, let’s take you on a journey and let you in on some of the top South African companies in terms of their broker ratings and share price targets.

It is no secret that South Africa is the most developed economy in Africa and the second largest economy on the continent (after Nigeria). The businesses listed and traded on the Johannesburg Stock Exchange (JSE), while domiciled in South Africa provide opportunities for traders to access into the African content as well as the global marketplace.

Lets have a look:

1. Vodacom Group Ltd (VOD) – Market Capitalisation – R213bn – 10 brokers

Vodacom is the largest South African telecommunications provider and a leading African provider, specialising in communication services which include mobile voice, messaging and data.

This company is still largely dependent on the South African consumer with 69.9% of Earnings Before Interest Tax and Depreciation (EBITDA) derived from domestic operations. Local regulatory changes and a move to lower data costs has seen domestic earnings flat to marginally lower as of late. The lower data costs are however expected to have a future ‘elasticity’, meaning that usage volumes are expected to increase as a result.

2. Standard Bank Group Ltd Market Capitalisation – R306bn– 12 Brokers

Standard Bank Group Ltd is a leading African financial services group originated in South Africa. Standard Bank is South Africa’s largest banking group by assets and operates in 20 countries in sub-Saharan Africa. FY18 results for the group have highlighted a tough operating environment having impacted the Corporate and Investment Business (CIB) which contracted marginally over the period (2%). Standard Bank does however see growth opportunities across Africa for the CIB division. The last quarter of FY18 showed some earnings momentum being realised, which the group expects to continue going forward.

A slightly larger contributor to group earnings is the Personal and Business Banking (PBB) division. The PBB business has managed to achieve double growth (10%) in the last financial year. The most significant headline earnings growth was realised by the group’s African (+400%) and International (60%) operations which are now starting to become more meaningful contributors to group earnings.

3. FirstRand Limited (R367 bn)-  Market Capitalisation – R367bn- 12 brokers

FirstRand Limited , is the holding company of FirstRand Bank, the largest financial services provider (in terms of market capitalisation) in South Africa.While group earnings have been largely weighted to the South African market where the company services 8.2 million clients, Firstrand is looking to organically grow its presence into the rest of Africa.  The company is considered the domestic leader when it comes to digital and data platforms and capabilities.

Interim results for FY19 period saw the rate of normalised earnings growth slowing to 7%. Earnings have historically been led by lending and transactional franchises, which are expected to be pressured by competition and regulation. In turn Firstrand is constantly looking for avenues to further diversify its revenue streams.

4. Anglo American Plc – Market Capitalisation – R530bn- 24 brokers

Is a globally diversified mining company with a portfolio of world class competitive mining operations and undeveloped resources. Anglo American Plc mines copper, diamonds and platinum group metals, as well as iron ore coal, nickel and manganese. The company is the largest platinum producer in the world through its subsidiary Anglo-American Platinum. Other major company holdings for Anglo include De Beers (diamond mines) and Kumba Iron Ore.

FY18 results saw earnings growth of 4% led by the nickel, manganese, coal, copper and platinum group metal operations, while earnings contracted in the diamond and iron ore divisions. Investors have been pleased with the group’s improving operational efficiencies and reduction of net debt which has moved from 4501m in the beginning of 2018 to 2848m at the end of 2018. The company returns 40% of earnings to share holders and has a historic dividend yield of 3.6%.

• Compagnie Financiere Richemont SA (R610 bn)- Market Capitalisation R610bn

Richemont is one of the world’s leading luxury goods groups with some of the most prestigious names in the luxury industry including Cartier, Van Cleef & Arpels, Baume & Mercier, Montblanc & Alfred Dunhill to name but a few.A breakdown of the group’s revenue see’s 38% thereof derived from the Asia Pacific region, 29% from Europe, 18% from North and South America, 8% from Japan and 7% from the Middle East and Africa. Richemont is currently realising sales growth across all these jurisdictions most notably in Europe and the Americas (boosted by the consolidation of YNAP and Watchfinder) as well as the Asia Pacific region. The company has also managed to achieve growth across all its business areas in FY19 which include specialist watchmakers, fashion and jewellery maisons divisions.

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