How much you money would have if you invested R1,000 in these SA tech companies at the start of 2021

Most of South Africa’s big technology companies listed on the Johannesburg Stock Exchange (JSE) recorded positive growth in their shares during 2021.

Among the telecommunications providers, electronic equipment manufacturers, and holdings companies consisting of numerous tech-related businesses, there were two that truly stood out — MTN and Ellies.

Between the close of markets on Monday, 4 January 2021, and Monday, 13 December 2021, MTN’s shares had grown by an impressive 159%.

To put this into perspective, MTN’s share growth over the five years preceding this was at about 20%.

R1,000 in MTN shares bought on 4 January was worth R2,585 by 13 December 2021, well over double the original investment.

Ninety One fund manager Samantha Hartard previously explained there were three reasons why MTN has performed so well this year.

The first was the macro-economic environment in the African economy moving off the harsh lows of 2020 brought about by the Covid-19 pandemic.

Secondly, MTN’s operational performance exceeded expectations, with EBITDA margins growing faster than revenue.

Thirdly, like other telcos, MTN benefitted from the increasing demand for data among customers across Africa, which helped spur its revenue.

But Ellies saw even bigger growth during the same period, with a 210% jump in its share price from 10 cents to 31 cents.

The electronic equipment manufacturer and importer has seemingly tapped into increasing demand for its products due to a rising number of work-from-home scenarios.

It also sells backup power solutions — popular products during a year that saw the most load-shedding in Eskom’s history.

Had you bought R1,000 of its shares on 4 January 2021, these would be worth a phenomenal R3,100 by 13 December 2021.

While Ellies’ share price took a beating on 10 December 2021 after it announced an expected revenue decline of 24.6% for the six months between May and October 2021, it has since rebounded.

Investors seemed to have taken kindly to assurances that Ellies would recover during the second half of its financial year, particularly with load-shedding expected to remain a factor for the foreseeable future.

It’s not good news for tech stocks across the board, however.

If you invested in EOH or Huge Group at the start of the same period, you would have lost a substantial amount of money.

With respective drops in their share prices of around 29% and 32%, you would have been left with R774 in EOH or R758 in Huge Group based on a R1,000 investment.

EOH has struggled to deal with a legacy of corrupt contracts with government entities and is facing a public sector blacklisting threat.

The Special Investigative Unit (SIU) is continuing to look into its dealings over the last few years.

Financial analysts have said EOH CEO Stephen van Coller’s decision to play open cards about the corruption has definitely impacted this.

One major loss for Huge Group was its unsolicited share swap offer to Adapt IT shareholders that failed dismally as most took up an offer from Volaris. Huge Group ended up with only 1.9% of Adapt IT shares, which it subsequently sold.

Other South African tech “losers” this year include Altron, Cognition, and Naspers.

The graph below shows how much a R1,000 shareholding in South Africa’s biggest technology and telecommunications companies would be worth on 13 December 2021 if you bought it on 4 January 2021.

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