The 10 Best African Stocks of 2012

Nigerian companies dominate this year’s list of the best-performing stocks in frontier Africa. In fact, domination may be an understatement. First, second, and third place all went to Nigerian stocks, and all but four of 2012’s 10 biggest gainers hail from Africa’s most populous nation.

Here’s a list of the Sub-Saharan stocks (not including South Africa) that have gained the most in US dollar terms since the start of the year.

Nigerian companies dominate this year’s list of the best-performing stocks in frontier Africa. In fact, domination may be an understatement. First, second, and third place all went to Nigerian stocks, and all but four of 2012’s 10 biggest gainers hail from Africa’s most populous nation.

Here’s a list of the Sub-Saharan stocks (not including South Africa) that have gained the most in US dollar terms since the start of the year.

(Note that performance was measured as of December 14, 2012, and each stock has averaged trade volume greater than $10,000 per day over the past 30 days. I excluded less liquid firms from the list.)

10. Ghana Oil +78.2% (Ghana)

Ghana Oil (GOIL) isn’t directly involved in offshore oil drilling along the Gold Coast, but it does operate Ghana’s second largest network of gas stations. Thus, the rising incomes of Ghanaian consumers mean increased fuel purchased at the pump and more cash spent on snacks at GOIL’s mini-markets.

The company opened five new filling stations this year; expanded its aviation fuel business; and increased its sales to the shipping industry. The moves paid off handsomely. Operating income for the first nine months of 2012 surged 28%, and investors took note. The stock now sports a trailing PE ratio of 14.2.

9. United Bank for Africa +78.5% (Nigeria)

Pan-African bank, UBA, rewarded its investors handsomely this year. The Nigeria-based lender now operates in 19 countries across the continent and has grown profits by 461% during the first three quarters of 2012.

How did it do it? By writing off fewer loans than the previous year and through some profitable currency trading. While this isn’t bad news, it would be nice to see more growth in loans and deposits, both of which are growing rather anemically.

8. Bralirwa +83.5% (Rwanda)

Rwanda’s largest brewery poured out profits in 2012 by selling more beer and at higher prices. Net income soared 45% during the first half of the year on a 22% increase in sales and a substantially reduced interest burden.

The company, which also holds the license to bottle and distribute Coca-Cola products in the country, is investing heavily in future growth. It recently added a new bottling line to its soft drinks plant, upgraded its brewery, and nearly doubled its fleet of delivery trucks.

7. Access Bank +90.7% (Nigeria)

Access Bank posted some eye-popping earnings figures this year. Over the first nine months, net interest income jumped 67%, fee and commission income increased 19%, and earnings per share more than doubled.

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Photo by Steve Garvie

Loan and deposit growth, however, has been pretty stagnant, so 2013’s profits probably won’t be as impressive. But with its shares trading at just 5.6x trailing earnings, even nominal earnings growth could make this upstart bank a darling of Nigeria investors this year, too.

6. British American Tobacco – Kenya +98.4% (Kenya)

East Africa’s largest cigarette manufacturer and tobacco-grower, BAT Kenya, lit it up this year thanks to a big increase in profitability (and its dividend payout). In the first half of 2012, the company grew operating profits 24% by keeping overhead costs in check. It also boosted capital expenditure in an effort to lift production.

5. GlaxoSmithKline Consumer Nigeria +98.7% (Nigeria)

After growing earnings 12% over the first nine months of 2012, GSK announced that it would up its stake in its Nigerian subsidiary from 45% to 80% at a price of NGN48 per stub. The Nigerian Stock Exchange requires that at least 20% of all firms’ shares be listed on the exchange.

It was a big vote of confidence in the company, which has enjoyed 21% growth in sales of consumer healthcare goods over the past four years.

4. Uchumi Supermarket +150.8% (Kenya)

Quite the redemption story, Kenya’s star stock this year was a Kenyan grocer that, just a few short years ago, went bankrupt and was delisted from the Nairobi Securities Exchange. Now, the company is back, and while its share price has been volatile, investors are bullish about the company’s expansion into Tanzania and Uganda. They were also intrigued by a new dividend payout.

If the company is to continue its outperformance, it’s got some high expectations to meet. Uchumi will need to justify its PE ratio of 19 with improved growth in EPS.

3. Diamond Bank +158.4% (Nigeria)

After posting a loss in 2011, Diamond Bank put up great numbers in 2012. Over the first nine months, management more than doubled operating profits, and investors obviously liked what they saw. Even after its 158% US dollar gain, however, the stocks still trades at just 4.2x trailing earnings.

Moreover, unlike its peers on this list, UBA and Access Bank, Diamond Bank actually appears to have laid the groundwork for exceptional performance in 2013. The bank increased its lending to customers by 38% over the past 12 months and deposits have surged 29%.

2. Cadbury Nigeria +159.5% (Nigeria)

Bouncing back strongly from a 2006 accounting scandal, the confectioner posted sweet returns in 2012 on the back of 34% earnings growth through the first three quarters. But the company actually registered a decrease in revenue and operating profit during the same time period, so these earnings gains may prove ephemeral. Management is banking on new marketing efforts of its Bournvita line and increased promotion of parent company Kraft’s products to boost the top line in 2013.

1. International Breweries +172.5% (Nigeria)

Frontier Africa’s best stock this year is a second-tier Nigerian brewer. Standing in the shadow of the much larger Guinness Nigeria and Nigerian Breweries, International quietly expanded its brewing capacity and sold lots more beer. How much more? Over the first nine months of 2012 sales soared 39% and earnings more than doubled. Nigerian investors took note and now anticipate an inaugural dividend payout.

The company now sports a PE ratio of nearly 50 and administration expenses are remarkably high, but this is definitely an under the radar stock worth watching in 2013.

What Do You Think?

There you have it, 2012’s best African stocks. Did this list surprise you? In the weeks ahead, we’ll be asking some market experts which stocks they think will be among 2013’s top performers. Do you have any predictions? Let us know in the comments!

Related Articles

The 10 Best-Performing African Stocks of 2011

Africa’s Top 10 Stocks Through the First Half of 2012

[Disclosure: I own shares of Ghana Oil.]

Going for Gold: Africa’s Best-Performing Stock Markets

If you’re anything like me, you’ve contracted a full-blown case of Olympic fever. So, in the spirit of the week, I’d like to hand out some medals for some outstanding performances delivered by Africa’s stock exchanges. It’s the inaugural InvestingInAfrica.net Olympiad!

If you’re anything like me, you’ve contracted a full-blown case of Olympic fever. So, in the spirit of the week, I’d like to hand out some medals for some outstanding performances delivered by Africa’s stock exchanges. It’s the inaugural InvestingInAfrica.net Olympiad!

Below are the dollar-adjusted returns of African stock indexes over the past month, six months, year, three years, and six years (period ending July 30, 2012). The top three performers in each “event” were awarded medals. (Note: Tanzania and Uganda were disqualified from competition because their primary indexes are dominated by cross-listings from Kenya.)

Let the games begin!

The Dash: One-Month US$ Return
Gold MSCI Nigeria Index 11.6%
Silver MSCI Ghana Index 7.6%
Bronze MSCI Kenya Index 4.2%

Not much of a contest in this event. Nigeria came out strong thanks to a nice currency tailwind. The Naira appreciated nearly 1.0% against the dollar in July. But it probably didn’t make a whole lot of difference in the final analysis as index stalwarts Nigerian Breweries, Dangote Cement, and Nestle Nigeria posted returns well into the double digits.

Photo by Qsimple

Ghana snagged the silver medal on the back of an impressive 12.8% local currency return from Fan Milk, and in spite of the sudden death of the country’s president, John Atta Mills.

The Sprint: Six-Month US$ Return
Gold MSCI Kenya Index 26.7%
Silver MSCI Nigeria Index 18.4%
Bronze MSCI Zimbabwe Index 5.8%

The past six months have clearly belonged to Kenya’s Nairobi Securities Exchange. Powerful showings from East African Breweries (35%), Equity Bank (37%), and KCB Bank (35%) in a relatively stable currency environment propelled the MSCI Kenya Index to the gold medal in the six-month sprint – beating Nigeria by a margin of over 800 basis points.

Zimbabwe snuck in for the bronze due to a fine 17% run from Econet Wireless.

The Short-Distance Run: One-Year US$ Return
Gold MSCI Kenya Index 18.2%
Silver Namibia Local Index 4.7%
Bronze MSCI Nigeria Index 1.1%

Kenya impressed in more than the sprints. Its track record over the past year left its nearest competitor in the dust. Powerhouse EABL got a fine supporting performance from petroleum retailer, KenolKobil (up 48% in local currency) and a friendly 7.8% push from a resurgent shilling.

The 15K: Three-Year US$ Return
Gold Namibia Local Index 52.3%
Silver MSCI South Africa Index 44.7%
Bronze Lusaka Stock Exchange All Share Index 43.6%

One of the most competitive events turned out to be the middle distance three-year run. Little Namibia took the field by surprise, sneaking past its emerging market neighbor, South Africa for the win. Both Namibia and South Africa fought a 4.5% currency headwind to post their solid marks.

The Marathon: Six-Year US$ Return
Gold Namibia Local Index 150.1%
Silver MSCI Mauritius Index 134.7%
Bronze Lusaka Stock Exchange All Share Index 94.7%

The premiere event also belonged to upstart Namibia. Although Mauritius Commercial Bank and the rest of the Mauritian squad mounted a strong challenge, ultimately no other index could hang with a team led by FNB Namibia, Namibia Breweries, and Bidvest.

Zambia picked up a second bronze by relying on an especially strong performance from Lafarge Zambia.

Medal Count

So there you have it. With two golds and a silver, Namibia leads the medal count, followed closely by Kenya and its two golds and a bronze.

I don’t have much planned in the way of a closing ceremony, but if you’d like more detail on the performance of Africa’s stock markets, check out this table.

[Disclosure: I own shares of Fan Milk.]

Africa’s Top 10 Stocks Through the First Half of 2012

The Nairobi Securities Exchange posted a remarkable 28.5% return during the first half of 2012 – a performance strong enough to make it the world’s third strongest bourse. It should come as little surprise then, that the East African market is home to five of Africa’s 10 best-performing stocks since the first of the year.

Here’s a list of the Sub-Saharan stocks (not including South Africa) that have gained the most in US dollar terms since the start of the year.

The Nairobi Securities Exchange posted a remarkable 28.5% return during the first half of 2012 – a performance strong enough to make it the world’s third strongest bourse. It should come as little surprise then, that the East African market is home to five of Africa’s 10 best-performing stocks since the first of the year.

Here’s a list of the Sub-Saharan stocks (not including South Africa) that have gained the most in US dollar terms since the start of the year.

(Note that each stock has averaged trade volume greater than $10,000 per day over the past month.)

10. United Bank for Africa +41.4% (Nigeria)

This Nigeria-based bank operates in 19 countries and has shot the lights out recently after having announced that first half earnings will likely increase by 50%.

9. Palm-CI +41.9% (Cote d’Ivoire)

Photo by Eduardo Zarate

The shares of Cote d’Ivoire’s largest palm oil plantation have benefited from a stabilizing political situation and strong global demand for edible oils.

8. KenolKobil +45.2% (Kenya)

This Kenyan oil retailer’s share price popped after Puma Energy, a Swiss firm, proposed a buyout of the company.

7. Kenya Reinsurance +45.3% (Kenya)

Kenya Re made shareholders very happy when it re-assessed the value of its real estate holdings upwards. Over a third of the company’s assets are invested in property – with much of it in the booming capital city, Nairobi.

6. NIC Bank +51.5% (Kenya)

This mid-sized Kenyan bank pleased the market by doubling the interest income it earned during the first three months of the year. It also plans to raise more capital from the exchange to fund expansion into Uganda and other countries in the region.

5. Societe des Caoutchoucs de Grand-Bereby (SOGB) +51.9% (Cote d’Ivoire)

Another beneficiary of the restored calm in Cote d’Ivoire, SOGB operates rubber plantations in the country’s southwest. Rubber prices are up nearly 10% since the start of the year. The stock is the only one on this list that also ranked among 2011’s top 10 performers.

4. British American Tobacco – Kenya +52.7% (Kenya)

This tobacco grower lit a fire under its share price when it nearly doubled its full year earnings in 2011. It rewarded shareholders by increasing the dividend by an equivalent amount.

3. Intercontinental WAPIC Insurance +61.2% (Nigeria)

A subsidiary of Nigeria’s up and coming Access Bank, Intercontinental WAPIC is one of the country’s oldest insurers. Its share price appears to have surged as a result of the company returning to profitability in 2011.

2. R.T. Briscoe +106.5% (Nigeria)

The Nigerian Stock Exchange’s top performer so far in 2012, this Toyota dealer also sells construction and farming equipment. This emphasis on agriculture placed it on many investors’ buy lists in May when the Nigerian president announced that the government will prioritize increased farm output.

1. Uchumi Supermarket +109.9 (Kenya)

Quite the redemption story, Africa’s star stock so far this year is a Kenyan grocer that, just a few short years ago, went bankrupt and was delisted from the Nairobi Securities Exchange. Now, the company is back, and while its share price has been volatile, investors are bullish about the company’s expansion into Tanzania and Uganda. They were also intrigued by news of financial trouble at the company’s main Kenyan rival, Tusky’s.

What Do You Think?

There you have it. Africa’s best stocks in 2012 so far. Did this list surprise you? Which stocks do you think will be among the top performers at the end of the year? Let us know in the comments!

[Disclosure: I have no position in any stock mentioned in this article, and I have no intention of taking any within the next 72 hours.]

The 10 Best-Performing South African Stocks of 2012 (So Far)

Construction stocks dominate this list of the Johannesburg Stock Exchange’s top performers thanks in part to President Zuma’s announcement of “massive” infrastructure development. Share prices in the sector are at their highest level in three years as investors anticipate a turnaround.

But hard hats are not required in order to read further.

Companies from a range of other industries bulldozed their way into the top ten, too.

Construction stocks dominate this list of the Johannesburg Stock Exchange’s top performers thanks in part to President Zuma’s announcement of “massive” infrastructure development. Share prices in the sector are at their highest level in three years as investors anticipate a turnaround.

But hard hats are not required in order to read further.

Companies from a range of other industries bulldozed their way into the top ten, too. All of them have gained more than 30% in US dollar terms since the beginning of the year.

Let’s count them down.

10. Clover Industries +33.8%

Clover, South Africa’s largest dairy company, milked its product line for all it was worth during the first half of FY2012. Earnings grew 16% on the back of a 7% sales increase. But what has investors happily chewing their cud is management’s decision to pay out a mid-year dividend. The stock now yields 2.7%.

9. Imperial Holdings +35.0%

Imperial gobbles up companies like I gobble up Skittles. The conglomerate owns trucking companies, South Africa’s largest auto-dealer network, construction equipment distributors, and insurance companies. But it’s hungry for more. Sometimes such acquisitiveness can create ugly balance sheets, but investors have been encouraged that debt levels have been reasonably well maintained.

Photo by Andrew Ashton
8. Super Group +35.2%

Super Group lived up to its name over the first half of FY2012 – boosting earnings by 63%. The company operates three divisions: supply chain, fleet management, and auto dealerships. It’s made a promising foray into African logistics and jettisoned some under-performing assets. Management has thus far declined to offer a dividend, but cash is beginning to pile up on its balance sheet.

7. Group 5 +35.7%

This construction and engineering firm has helped to build many high-profile South African infrastructure projects. Now it wants to cement a reputation as a continent-wide player. The company generated 26% of its revenue outside South Africa in the first half of FY2012, and management wants to grow that to 40%. A healthy pipeline of new projects has added to investors’ bullish outlook.

6. Hudaco +36.4%

Shares of this stolid machinery parts distributor rocketed to a 22-year high in January after the company announced a 29% earnings increase. Management also jacked up its dividend 26%. The stock continues to yield 5.5% even after the big appreciation in the share price this year.

5. Pinnacle Technology Holdings +37.6%

Pinnacle Technology owns the licenses to distribute some very popular computer and networking brands, including Dell, Samsung, HP, and IBM. It also assembles its own line of PCs. This product mix proved popular with customers during the first half of FY2012. Sales soared 32% over the previous year. The company is on the prowl to add more product lines to its stable and is particularly keen on expanding north of its South African home. It has set up shop in Botswana and Namibia, and plans to enter two more countries soon.[table id=4 /]

4. RMI Holdings +37.9%

A relative newcomer to the Johannesburg Stock Exchange, RMI Holdings debuted on the market in March 2011 after being spun off from financial services group, RMB Holdings. RMI owns stakes in a range of South African insurance companies. Recently, the most profitable investment in its portfolio has been OUTsurance, a property and casualty insurer. OUTsurance’s earnings grew 54% during the first half of FY2012.

3. Invicta Holdings +37.9%

Like Hudaco, Invicta is a big player in ball-bearings, spare parts, and sealants. (Hey, this is a list of South Africa’s top-performing stocks, not necessarily its sexiest ones.) Much of what they sell goes to the farming and mining sectors. Both sectors are in a bit of a boom. In November, Invicta reported a 23% earnings bump for the first half of its 2012 fiscal year.

2. Barloworld +42.2%

A large conglomerate, Barloworld’s primary earnings drivers are the sale of heavy equipment and vehicle sales and rentals. After a rather dismal 2010, the company reported a 120% surge in profit and more than doubled its dividend payout. In November, a coal-mining operation in northern Mozambique ordered 10 ginormous Caterpillar dump trucks from the company. The trucks’ price? $400 million. No wonder the company trades at more than 22x trailing earnings.

1. Bell Equipment +69.2%

Bell makes all the stuff that my four-year-old nephew dreams about – big yellow bulldozers, dump trucks, diggers, and backhoes. The construction and excavation equipment maker posted a 49% increase in sales during 2011 thanks to new markets in Russia and Mozambique. It’s one of the cheapest companies on this list in terms of trailing earnings multiple (P/E Ratio: 9.1), but it doesn’t pay a dividend.

So, that’s how it all panned out. What companies will be in this list come July? Let us know your picks in the comments!

[Disclosure: I do not own any stocks mentioned in the above article, and I don’t intend to purchase any in the next 72 hours.]

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The Ten Best African Stocks of 2012

The 10 Best-Performing African Stocks of 2011

It’s been a tough year for Africa investors. Most sub-Saharan indexes are in the red and some have dramatically underperformed the S&P500. But a handful of frontier listings managed to buck the trend.

Here’s a list of Africa’s top-performing stocks year-to-date.

It’s been a tough year for Africa investors. Most sub-Saharan indexes are in the red and some have dramatically underperformed the S&P500. But a handful of frontier listings managed to buck the trend.

Here’s a list of Africa’s top-performing stocks year-to-date. (Note that returns are dollar-adjusted, and all companies average weekly trading volumes in excess of $10,000.)

10. ABC Holdings (ABCH:BG) — 61.5% YTD Return
The Botswana Stock Exchange’s top performer thus far is regional bank, ABC Holdings. ABC grew after-tax earnings by 33% during the first half of the year thanks to a stabilizing economic environment in its largest market — Zimbabwe.

9. First Banking Corp Holdings (FBCH:ZH) — 62.9% YTD Return
This Zimbabwean financial services firm also owns a large share of Turnall, a local manufacturer of construction materials. After more than doubling its first-half earnings, management rewarded shareholders with a hefty mid-year dividend payment.

8. Produce Buying Company (PBC:GN) — 68.0% YTD Return
Ghana’s largest dealer of cocoa and shea-nuts nearly doubled its profits in the first six months of its 2011 fiscal year. The company may have benefited from political instability in neighboring Côte d’Ivoire, a major cocoa-producer.

Photo by beckstei

7. Total Petroleum Ghana (TOTAL:GN) — 80.5% YTD Return
The subsidiary of the French oil giant operates more than 200 service stations throughout Ghana. Half-year results showed a 45% increase in profits, but third quarter results indicate much less scintillating growth. The share price has since been on a downward trajectory.

6. ZB Financial Holdings (ZBFH:ZH) — 100.0% YTD Return
A diversified Zimbabwean financial services company, ZB Financial derives most of its income from commercial lending. It also operates a sizable insurance business. Investors were cheered by a dramatic increase in profitability during the first half of the company’s fiscal year.

5. Dar es Salaam Community Bank (DCB:TZ) — 101.8% YTD Return
A Tanzanian bank focused on lending to small and medium enterprises, DCB management boosted its 2010 dividend by 71%. Earnings increased 23% in the first nine months of 2011, propelled by a big gain in net interest income.

4. Société des Caoutchoucs de Grand-Béréby (SOGC:BC) — 104.0% YTD Return
The Côte d’Ivoire-based SOGB produces two very hot commodities: rubber and palm oil. Accelerating vehicle sales in China and India have driven up rubber prices, while palm oil prices are on the rise due to its increased usage as a bio-fuel.

3. AEL Zambia (AELZ:ZL) — 109.4% YTD Return
The company supplies explosives to the Zambian mining and construction industry. Its 2011 financial results have been nothing to write home about. Investors may be speculating on long-term growth in the local mining sector.

2. Truworths Zimbabwe (TRUW:ZH) — 137.1% YTD Return
A leading Zimbabwean clothing retailer, Truworths operates 59 stores and also manufactures apparel for export. The company benefited immensely from dollarization with 2011 fiscal year operating profit soaring 204%.

1. Fidelity Life Assurance Company (FLIFE:ZH) — 536.4% YTD Return
Africa’s top performing stock thus far in 2011 is Zimbabwe’s oldest insurance company. Fidelity Life made its shareholders extremely happy by growing profits by 431% during its 2011 fiscal year on the back of strong local demand for insurance products and a growing operation in Malawi.

Clearly, the Zimbabwe Stock Exchange was chock full of hidden gems one year ago. Are there more to be unearthed in 2012?

Throughout the month of December, I’ll be scouring African markets in search of bargain stocks. Stay tuned to see what I dig up.

Disclosure: I own shares of Dar es Salaam Community Bank.

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The 10 Best African Stocks of 2012