The Johannesburg Stock Exchange’s Top 40 index is dominated by a handful of large-cap companies with significant offshore earnings. In early 2025, many of these names trade at premiums or discounts to historical averages. This article examines whether current market prices reflect reasonable fundamental value using two widely accepted methodologies: discounted cash flow (DCF) and comparable multiples analysis.
The analysis is based entirely on publicly available financial statements, consensus forecasts from licensed brokers, and historical valuation data up to February 2025. No proprietary models or forecasts are used.
Valuation Methodology
Two complementary approaches were applied to six JSE heavyweights (Naspers/Prosus, BHP, Richemont, Anglo American, MTN, and British American Tobacco):
Two-stage DCF model
5-year explicit forecast period + terminal value using Gordon growth formula (perpetual growth 3.5–4.5% depending on sector)
Multiples comparison
Forward P/E, EV/EBITDA and price-to-book compared against 10-year medians and emerging-market peers
Key Findings – February 2025
Appearing Undervalued
- Anglo American (~22% below central DCF fair value)
- MTN (~18% discount)
- British American Tobacco (~15% discount)
Trading at Premium
- Naspers/Prosus (~28% above DCF central case)
- Richemont (~12–15% premium)
The Rand Factor
A significant portion of the apparent discount in resource and consumer stocks disappears when valuations are calculated in US dollars rather than rand terms, highlighting the persistent influence of currency translation on JSE pricing.
Important Note
South African-domiciled investors receive returns in rand. Valuation in hard currency is useful for comparison but does not change the actual cash flows received in local currency.
Conclusion
As of early 2025, several JSE heavyweights appear to trade at meaningful discounts to conservative fundamental value according to DCF and historical multiples analysis. However, these discounts are partly explained by currency weakness and sector-specific risks. Naspers/Prosus remains the clearest outlier on the upside, largely driven by the market’s willingness to assign a sustained premium to its Tencent stake.
This analysis is for educational and research purposes only and does not constitute investment advice or a recommendation to buy or sell any security.