Strategy & Head of Equity Research
April 17 2019
Jumia, the e-commerce play on Africa which listed its American Depository Shares this week, has seen its share price almost triple in the three days since its 11 April debut. Jumia's market capitalisation of US$3.4bn is, at the time of writing, bigger than Sonatel, the francophone Africa mobile telco, bigger than Guaranty Trust, the largest bank in Nigeria by mkt cap, bigger than Equity Bank, the largest bank in Kenya by mkt cap, and close to half the size of Shoprite, the South African traditional retailer. Assuming that MTN owns 30% of Jumia, its stake equates to c7% of MTN's market cap.
Jumia's trailing Price/Book and EV/Sales multiples* are 8.5x and 19.5x, respectively; its last disclosed Ebitda and earnings are both negative. These are eye-watering multiples for the majority of frontier and small emerging market investors, but they appear within the range exhibited by listed comparables with operations mainly in China, Latin America, ASEAN and the US. EM e-commerce stocks are up, on a simple average, by over 50% ytd.
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