A new research, which provides valuable insights into the West African business landscape for the sake of investors in the region, has scored Nigeria FIRST for dominating 21 companies in West Africa top 30 report.
The report, which was conducted by Christopher W. Hartland-Peel, 2022, listed the Top 30 companies in West Africa ranked by market capitalisation.
It showed that banks make up 13 of the stocks listed, manufacturing makes up 8, telecoms make up 5, and the remaining 4 stocks come from other industries.
The research found that the big-cap companies (10 in total) have a market capitalisation of $40.3 billion with a price-to-earnings ratio (P/E) of 16.3 and return on equity (ROE) of 55.8%. The mid-cap companies (20 in total) have a market capitalisation of $11.4 billion with a P/E of 8.0 and an ROE of 26.0%. The average market capitalisation for the Top 30 companies is $51.7 billion, with a P/E of 14.4 and an ROE of 49.2%.
Dangote Cement, MTN Nigeria, and BUA Cement make up 51% of the Top 30 companies in West Africa. The 9-month reported earnings for the region in 2022 showed a 3% increase. The report also shows that dual-listed stocks trade at discounts to their home markets, with discounts of 47% for Seplat Petroleum and 62% for Airtel Africa. Big-cap companies are more profitable, with ROEs of 56% compared to 26% for mid-cap companies. In addition, their stock market returns are superior to those of mid-cap companies.
Nigeria, the regional heavyweight, has 21 stocks listed in the report, followed by the BRVM with 8 stocks, and Ghana with 1 stock. The report shows that banks make up 13 of the stocks listed, manufacturing makes up 8, telecoms make up 5, and the remaining 4 stocks come from other industries.
For investors looking to invest in the West African market, the report suggests that big-cap companies may be a more attractive option due to their higher profitability and better stock market returns compared to mid-cap companies. Additionally, with the growing economy in the region, it is possible that the overall performance of the market and its companies will continue to improve in the future.
