With the overall market ending 2022 broadly flat (down 0.9%, or up 3.6% including dividends), last year the money was made with stock picking.
In dollar terms, the JSE All Share Index was down 7.3% in 2022 (or -3.1%, when factoring in dividends).
Needless to say, a calendar year is simply an arbitrary measurement of time – different conclusions can be reached by analysing a different (and random) time period. For example, Naspers was up by nearly two-thirds (63%) in the last nine weeks of the year.
There was money to be made within the JSE Top 40
Eight stocks – Nedbank, African Rainbow Minerals, Absa Group, Woolworths, Investec plc, Glencore, Exxaro and Mediclinic International – were up over 20% in the year. These banks had been relative underperformers versus Capitec, FirstRand and Standard Bank in recent years.
Commodity price pullbacks through the year notwithstanding, these more focused commodity counters fared better than Anglo American and BHP. Woolies finally solved its David Jones problem in Australia and Mediclinic approved a buyout offer from parent Remgro and unlikely bidder MSC in August.
By contrast, shares in Anglo American Platinum, MTN and Mondi ended 2022 more than 20% lower.
Amplats took a hit as prices of platinum group metals (PGMs) came under pressure during the year. MTN’s struggles across the continent – especially operating in and getting cash out of Nigeria – are well-known (after the market closed on Friday, it announced that it had been slapped with a R13 billion tax bill by Ghanaian authorities). And the impact of Russia’s invasion of Ukraine led to a sharp selloff in Mondi shares at the end of February (it has sizeable operations in both countries.)
Moneyweb’s excellent Company Stats tool allows one to filter companies by performance over a number of time periods as well as according to various ratios – such as forward price-earnings ratio (PE), PE, dividend yield, return on equity and so on). This tool is available to Moneyweb Insider Gold subscribers.
The share prices of six JSE-listed companies more than doubled in 2022, with four of these more than tripling. Sure, there are smaller companies on this list, including Stefanutti Stocks (R300 million market cap, up 259% last year) and MC Mining (previously Coal of Africa; R1.3 billion market cap, up 205% in 2022). Shares of very thinly-traded Deutsche Konsum Reit (real estate investment trust) were up 485%.
But Grindrod (market cap of nearly R7 billion) was up 106% last year as it finalised its restructuring to focus on ports, terminals and logistics (it sold its bank in November). Transnet’s horrid year ensured that Grindrod’s Mozambican terminals grabbed market share, which the state-owned logistics company is going to battle to get back.
Investment holding group HCI (market cap of R13 billion) was up 105% due to a post Covid-19 turnaround in its Tsogo Sun and Southern Sun leisure assets. News of an oil discovery off the coast of Namibia sent the share price rocketing early in the year. It owns a 10% indirect share in the Venus block. Some estimates have put the stake of HCI/TotalEnergies joint venture Impact Oil at between $500 million and $1 billion. HCI’s share of that could be as much as R8 billion – practically the increase in its market cap through the year. It plans to monetise the stake in the next two years.
Finally, stock-pick favourite Thungela Resources (market cap of R35 billion) was up 224%. This followed a remarkable 192% run from its listing price of R29 in 2021. It would be tempting to say that Anglo American’s bankers mispriced these assets when they were spun out of the group (just as the ESG mania had reached its crescendo). To be fair, they could not have predicted that global coal prices would quadruple over the last two years.
Top 20 performers on the JSE in 2022
|Share code||Market cap (at 31 December)||Performance in 2022|
|Deutsche Konsum Reit||DKR||R4.2bn||485.37%|
|African Dawn Capital||ADW||R13.3m||137.5%|
|Premier Fishing and Brands||PFB||R382.2m||96%|
|African and Overseas N||AON||R127.8m||78.57%|
On the opposite end, Steinhoff, Murray & Roberts and Nampak all endured disastrous years, with declines in excess of 70%. These were former market darlings, as detailed in this Moneyweb analysis.
Steinhoff’s decline came in mid-December when it announced that it had reached an agreement with creditors to resolve the current unsustainably high levels of debt in the group. If shareholders agree to the transaction, they will retain 20% of the group (creditors will hold the other 80%). If they don’t vote in favour of the transaction, they will get wiped out completely. Shares more than halved from R1.69 to 58c following the news. Steinhoff shares ended the year down 89.5%.
Over a dozen listed shares saw their share prices more than halve during the year. Four of these are microcaps and it is clear that it is no longer appropriate for these companies to be listed.
Sable Exploration and Mining has a market cap of just R4 million (down 91% last year), Visual International Holdings R12 million (down 50% in 2022) and AH-Vest R18 million (down 63% in 2022). These shares are all very thinly traded.
Mantengu Mining (previously Mine Restoration Investments) has a market value of R1.5 billion, but it battled to raise R15 million in a rights offer late last year.
Smaller Jasco (market cap R48 million), Labat (market cap R60 million) and Kibo Energy (R91 million) saw their shares down 58%, 65.5% and 50%, respectively. Brikor, which returned from suspension in 2020, saw a 63.6% drop in its share price during 2022.
Delta Property Fund (which ended the year with a market value of R214 million) had a torrid year on the back of an equally tough 2021, when trade in its shares on the JSE was suspended for seven months . Following the release of its 2022 results in May, shares dropped from around 59c to 43c. They fell again following the announcement of its interim results in November. Delta shares ended 2022 down 52%.
Finbond, with a market cap of half a billion rand, saw its shares down by two-thirds (66.7%) in 2022. RMB Holdings continued its stated strategy of “monetising” its assets and returning cash to shareholders. This means that its asset base will continue to shrink until there is, in effect, no company left. Its shares were down 65% in the year. It returned R2 billion in the second half of last year, in the form of a R1.24 special dividend, following the disposal of its stake in Atterbury Europe.
In many of the above cases, sentiment would’ve turned negative at some point during the year. This might’ve been because of some news or information that had not been public previously.
In other cases, these companies could also be facing serious (or even existential) challenges operationally. Some, like Murray & Roberts and Nampak, could be real recovery stories. There are some obvious comparisons to turnarounds at Omnia and Super Group, once their capital structures were fixed. But investments like this carry a significant amount of risk (witness: Steinhoff).
Perhaps the bargains are to be found somewhere in the middle, in those stocks that didn’t shoot the lights out or plummet to new lows?
Bottom 20 performers on the JSE in 2022
|Share code||Market cap (at 31 December)||Performance in 2022|
|Sable Exploration and Mining||SXM||R4.4m||-90.82%|
|Murray and Roberts||MUR||R1.2bn||-80.58%|
|Delta Property Fund||DLT||R199.9m||-51.72%|
|Sirius Real Estate||SRE||R18.1bn||-48.35%|