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Sizing it all up

Jun 02 2010 15:00 Marc Hasenfuss

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When it comes to investing, market watchers can probably say with some certainty that size doesn’t matter.

Certainly, a big company (say, with a market capitalisation of R60bn) really has no better chance of satisfying an investor than a company that has a market capitalisation of R60m.

So what’s the point of analysing the market capitalisation rankings?

Admittedly, it’s always fun to see who ranks as the “big boss’ companies of the JSE, but the rankings are also very telling.

Who's hot, who's not


For example, the rankings can show which stocks have lost or gained market support over the year and which JSE sectors are hot and which are tepid.

The rankings, to an extent, can also show the effects of corporate action: mergers, acquisitions, restructuring and disposals.

While the top 10 market cap rankings for 2009 are (barring one change) the same companies listed in 2008, there’s been a major positional change, in that mining conglomerate BHP Billiton edged out British American Tobacco (BAT) for top spot at year-end 2009.

In our previous Top 200 survey BAT (with a market cap of R497bn) was comfortably the biggest listing on the JSE.

At year-end 2008 – a period, we must remember, during which sentiment for commodity producers flagged – BHP (R396bn) and Anglo American (R283bn) were a very distant second and third.

However, at year-end 2009 BHP Billiton was back in fashion and finished the year with a market cap of R529bn – even higher than its market cap at the end of 2007.

Anglo America, which was more than R200bn less than BAT at year-end 2008, grew to R429bn at the end of 2009 – opening up some distance on fourth placed SABMiller (R357bn).

The rankings continued

SABMiller and Anglo American were unchanged in their respective third and fourth rankings, while Richemont (ninth, with a market cap of R130bn), Sasol (sixth with R190bn) and MTN (fifth at R217bn) also retained their positions on the table.

Impala Platinum – which saw its market cap grow from R85bn to R128bn – edged banking giant FirstRand (despite the fact its market cap grew from R91bn to R103bn).

For those interested in relative sizes, in 2009 the collective value of the five biggest shares on the JSE was R600bn more than in 2008.

The most significant new addition to the Top 20 was that of cellular services provider Vodacom (R84bn), which was unbundled from Telkom.

Telkom, which at year-end 2008 was the 16th biggest company on the JSE, was ranked at 44th position with a market cap of R19.5bn.

For what it’s worth, even if Telkom and Vodacom’s market caps are added together the combined value would still be considerably less than MTN at the end of 2009.

We’d also imagine the chaps at Old Mutual (ranked 17th, with a market cap of R72bn) would be pleased to see some distance between themselves and Sanlam (ranked 20th at R49bn).

There was a point during 2009 when the market caps of Old Mutual and Sanlam were not that far apart.

Movers, shakers

Some of the bigger movements up during 2009 include platinum miner Lonmin (R45bn, moving from position 32nd to 23rd), pharmaceutical group Aspen (R32bn, from 45th to 32nd), industrial conglomerate Steinhoff International (R31bn, from 38th to 33rd) and Rupert family-controlled investment vehicle Reinet Investments (R23.5bn, moving from 53rd to 36th).

Other big movers to catch the eye include Aquarius Platinum (moving from 62nd to 37th, with a market cap of R22bn) and newly enlarged property group Redefine (from 89th to 47th, with a market cap of R19bn).

Mass banking specialist Capitec Bank also broke into the top 100 (ranking 93rd) with its market cap extending markedly from R2.4bn to R6.5bn.

We must also applaud construction group Esorfranki, which moved up from 182nd to 178th – increasing its market cap from R900m to R1.1bn.

Impressive performance

Considering the damage sustained in the SA’s construction and building supplies sector – especially among recently listed companies – Esorfranki’s achievement is worth a special mention.

All things considered, steel supplies group Argent, timber specialist York Timber and diversified building supplies group Buildmax probably all did well to stay in the Top 200.

In terms of crunched value, gold miner Harmony – which saw the stronger rand negate the bullion price hike – took a tumble from 20th position to 31st, with its market cap drifting down to R33bn.

Some of the old AltX darlings were also hit hard.

Golf estate developer Pinncle Point (formerly Acc-Ross), which was ranked 113th last year, crashed out of the Top 200 as its market cap plunged from almost R3bn at year-end 2008 to just R415m.

Vox Telecom, ranked 172nd in 2008, also dropped out of the Top 200, with its market cap plummeting from R950m to R344m.

 - Finweek

To view the Market Capitalisation Table, click here
 
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