Strategy Note /

Gold in the rough: Africa's top-performing stocks in H1 2022

  • Most African markets delivered negative returns in the first half of the year; Nigeria is an outlier

  • But there have been strong outperformers at the stock level; we highlight 20 top companies and discuss four in detail

  • We see a common theme among the top performers; they benefited from the Russia-Ukraine war and the surge in commodities

Gold in the rough: Africa's top-performing stocks in H1 2022
Janet Ogunkoya
Janet Ogunkoya

Senior Research Analyst

Tellimer Research
5 July 2022
Published byTellimer Research

The global equities market delivered negative returns in H1 22 with the MSCI world index down 20.6%. African markets have not been excluded from the sell-off, with MSCI EFM Africa down 10.3%, but they outperformed global and emerging market equities.

Despite the general rout, some stocks have provided positive returns for investors. We highlight 20 top-performing companies and discuss four of them in detail. We notice a common theme: mining companies and palm oil producers delivered good returns because of their positive exposure to the Russia-Ukraine war.

Equities suffered a bloodbath in H1 2022

Nigeria is an outlier

We have previously spotlighted the Nigerian equities market and its strong performance ytd. Its rally has bucked the global market trend and defied the odds, given the country's persistently weak macroeconomic fundamentals. We identified the three primary factors driving the rally:

  1. Local investors are dominating equity markets. No foreign portfolio investors (FPIs), little contagion.

  2. Low fixed income yields driving investors into equities.

  3. Foreign Portfolio Investors (FPI) exiting through dual-listed stocks.

Now, the country's ejection from the MSCI FM looms, but we argue it is only likely to have a modest impact on share prices.

Where is the gold in the rough?

Even amid a terrible six months for global equities, some African stocks have delivered very good returns. 

South African stocks make up half of the top 20 performing stocks in the region, despite the poor performance of the country’s overall equity market – this can be attributed to the country’s market depth when compared to its regional peers. South Africa is followed by Nigeria, which is unsurprising. Some stocks from Morocco, Egypt and Mauritius also posted strong returns. Interestingly, three of our coverage companies also make it into the top-20 list. 

The two top stocks in the Nigerian market, Airtel Africa and Seplat, have an interesting story. They are both dual listed (on the Nigerian stock exchange and London stock exchange) and their returns have been partly fuelled by investors using them as an exit route. On the London Stock Exchange, Airtel Africa is down c 3% ytd while Seplat has returned c15%. So, this calls to question their position as top-performing stocks. 

South African stocks dominate in H1 22

Thungela Resources

H1 22 US$ total return: 189% | market cap: US$1.9bn

Thungela Resources is one of the largest producers and exporters of thermal coal in South Africa – based on aggregate thermal coal reserves and commercial production. The stock is the best-performing stock in Africa this year by a mile.

After recording a loss in 2020, the company returned to profitability in 2021. Global coal prices have increased in the past six months, given improving economic activity from Covid lows and the supply constraint induced by the Russian-Ukraine war.

It is not all rosy though; coal miners are typically not a focus for ESG investors, and coal might be phased out as an energy source as the world slowly transitions to renewables.


H1 22 US$ total return: 20% | Market cap: US$1.9bn

Managem is a Moroccan mining company that produces gold bullion, silver bullion and cobalt cathodes. The company has managed to post strong performance since last year (2021 US$ total return was 36%) mainly due to the rising demand for cobalt.

Demand for cobalt has been on the rise due to increasing demand from battery producers (an extension of higher demand for electric vehicles). Recently, the company signed a 7-year agreement with Renault to supply low-carbon cobalt sulphate for batteries. Asides from this, the non-battery demand for cobalt is also improving as economies and sectors such as aerospace recover from the Covid downturn.

MTN Nigeria

H1 22 US$ total return: 23% | Market cap: US11.1bn

MTN Nigeria has been a top recommendation from us for a while now. A few factors that have driven the stock's performance so far this year include the following:

Unfortunately, MTN Nigeria is also exposed to the Nigerian problem. Nigeria remains a no-go for international investors, given the foreign exchange bottlenecks. Recently, MTNN has been hit by a few challenges including a fraud case and a SIM card registration bottleneck. However, we remain optimistic about the stock as we believe there is still more upside potential, mainly for the reasons below.

  1. MTNN's positive revenue and profit outlook.

  2. Its strong positioning in terms of maintaining market leadership.

  3. The potential upside from Payment Service Bank (PSB) license approval.


H1 22 US$ total return: 16% | Market cap: US$1.0bn

Lafarge has benefited from increased cement prices and healthy demand for cement in and around Nigeria. This has translated into impressive earnings for Lafarge and the other cement players in Nigeria – Dangote and BUA (who also make the list of top performers). That said, Lafarge stands outs as the company’s earnings continue to be bolstered by low finance costs following the deleveraging of the company’s balance sheet.

While the company’s expansion plans do not appear as aggressive as its domestic peers, the company plans to unlock unutilised plant capacity by improving efficiency and investing capex. The improvements in the financials have not been fully priced in by investors. The company’s multiples remain cheaper than domestic peers, with a current EV/EBITDA of 3x compared to 7x for Dangote and 16x for BUA. Lafarge also doubled its dividend payments to investors in 2021, providing an attractive yield. The company’s efforts to ensure green operations by increasing the use of low-carbon alternative fuels also make the stock attractive to ESG investors.


The sectors that reaped the benefits of war

South African miners

Global coal prices have been hitting all-time highs (Newcastle coal futures are up 74% ytd) as the Russia-Ukraine war has resulted in shortages. South African thermal coal miners benefit from higher prices and Thungela Resources and Exxaro Resources are among the top-performing African companies.

Palm oil producers

Africa's palm oil producers are small and did not make the cut for list as their market caps are below US$1bn, but they have delivered sizeable returns, eg. Presco Oil (+87% US$ total return) and Okomu Oil (61% US$ total return) in Nigeria, as well as Palmci (66% US$ total return) in Ivory Coast. We had predicted a rally in palm oil stocks due to palm oil’s correlation to crude oil and also because of the tight supply of soybean oil.