Analysis of Africa’s Top 250 Companies

Sometimes it is easy to determine whether African stocks have had either a good or bad year. This year is a little more complicated but the overall picture is relatively positive. One simple, although blunt, tool for comparing growth over the past year is to look at the market value of each ranking position.

Tanzania Portland Cement Company takes 250th position this year with a value of $273m, in comparison with the $240m that South Africa’s Absolute needed to secure the same spot last year, so the qualifying mark for our Top 250 has clearly increased.

However, there is very little change in the value of the 50th or 100th ranked companies, underlining the fact that there has been no continent-wide boom in stock values. It is important not to read too much into the figures at the top end of the table, as both BHP Billiton and Anglo American have most of their operations outside Africa, have most of their shares listed on other bourses and are not primarily considered to be African companies.

BHP Billiton remains the biggest company with an African listing and is valued at $76.3bn in this year’s table, up from $72.1bn last year.

As last year, South African companies take nine of the top 10 positions. The final company in this exalted company is Nigeria’s Dangote Cement, which moves up from tenth to seventh as a result of a jump in market value from $14.5bn to $22.7bn.

SAB Miller and Anglo American retain second and third positions, although with slightly reduced capitalisations and the latter is coming under increased pressure from Sasol for third position. The value of the synthetic fuels specialist has increased to $37.6bn from $29.5bn last year, partly as a result of interest in its international gas and coal to liquids projects.

Despite a boom in unconventional oil and gas production in North America, the price of crude oil remains stubbornly above $100 a barrel and so Sasol’s previously niche technology is gaining more attention.

Sasol aims big
The biggest African oil and gas company by some distance in our survey is Sasol. Ranked fourth in our Top 250, the synthetic fuels specialist is investing a massive $20bn in a gas-to-liquids (GTL) project in the US. Chief executive David Constable has revealed that for every $1 annualised rise in the price of crude oil, the company’s 2013 operating profit will increase by $630m. Some have raised fears that the company’s international ambitions could see it leave South Africa, but the company has pledged to keep its primary listing on the JSE.

The balance of the company’s global production is certainly moving away from coal-to-liquids (CTL) towards GTL, but it appears to be favouring cheap North American unconventional gas as feedstock over Mozambican reserves.

Despite taking the lead in developing the Mozambican gas sector, it has not yet become involved in the gas boom in the north of that country, although it is gradually stepping up production on its established fields further south. On a more negative note, plans for additional CTL production capacity within South Africa itself appear to have been shelved.

Mohamed Kharva, an analyst at Nedgroup Securities, says: “Sasol over the last 10 years has looked at investing in countries such as China, India, Qatar, Nigeria and South Africa. With the exception of Qatar, these other countries have not proven to be economically feasible. If Sasol were to concentrate on only investing in South Africa, it would have limited access to competitively priced feedstock or cheap, highly productive labour. In the US over the last few years, the gas price has collapsed, which has given them a significant competitive advantage in energy.”

Changing times for telecoms
MTN Group is ranked sixth in our table with a value of $33.9bn. In a policy turnaround, MTN and other large operators are planning to sell their mobile tower networks in many parts of Africa. MTN is looking to divest $1bn of towers in Nigeria, while Bharti Airtel may seek to raise more than $2bn from sales across the continent.

Mobile operators had been keen to control their own networks in order to maintain services: power supply problems mean that most towers are equipped with their own generators. Now, however, tower specialists are expected to buy most of the towers on offer. Vodacom has already sold more than 1,000 towers in Tanzania to Helios Towers Africa, while IHS has bought 3,000 towers in Rwanda from MTN.