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JSE LIMITED

JSE JSE Listed
Market Cap
** R12.5 Billion

Investment Analysis: JSE Limited (JSE:JSE)

Date: 12 January 2026 Analyst Role: Senior Equity Analyst Subject: JSE Limited (The Operator)

Step 1: Data Gathering & Source Verification

I have reviewed the JSE's financial data covering the 2024 financial year and the first half of 2025. The analysis is based on the following primary documents:

Step 2: Metric Extraction

  • Current Share Price: ~R144.58
  • Market Cap: R12.5 Billion
  • Dividend Yield (L12M): 5.7%

  • Calculation: Trailing Twelve Month (TTM) Dividend of 828 cents (Interim 2025 + Final 2024) divided by current share price. The company maintains a high payout ratio policy.

  • Liquidity Check: Liquid / Low Risk

  • Stock Liquidity: The JSE's own stock trades with sufficient volume for retail and most institutional mandates (Average Daily Value ~R13m).

  • Operational Liquidity: The exchange itself saw Average Daily Value (ADV) traded jump to R26.8bn in H1 2025, a critical driver for their revenue.

  • P/E Ratio: 12.0x

  • Based on TTM Headline Earnings Per Share (HEPS). This is slightly below its long-term average range of 13x-15x, suggesting value.

  • Net Asset Value (NAV): N/A

  • Note: As an operating company, P/E and EV/EBITDA are more relevant than NAV. However, the Price-to-Book ratio is ~2.6x, reflecting its capital-light, tech-heavy nature.

Step 3: Operational & Strategic Analysis

Business Overview JSE Limited is a vertically integrated market infrastructure operator. It does not just "run the stock market"; it earns revenue from four pillars:

  1. Capital Markets: Listing fees (annual and initial) and trading fees (Equities, Bonds, Derivatives).
  2. Post-Trade Services: Clearing and settlement (JSE Clear) and back-office services (BDA).
  3. Information Services: Selling market data (a high-margin, recurring revenue stream).
  4. JSE Private Placements: A newer venture into private capital raising.

Performance Trend (H1 2025 vs H1 2024) The latest results (H1 2025) indicate a strong recovery in operational performance:

  • Net Profit After Tax (NPAT): Up 13.2% to R557.8 million.
  • Revenue Growth: Total income increased by 10.3%.
  • Drivers: The growth was volume-driven. Higher volatility in global and local markets pushed the Average Daily Value (ADV) traded up significantly (R26.8bn vs R20.9bn in the prior period).
  • Efficiency: Operating expenses grew 7.5%, which is below the income growth rate (positive jaws), leading to an improved EBIT margin.

Sector Context

  • Macro Factor: Volatility as a Proxy. Unlike most sectors where stability is preferred, the JSE thrives on volatility. The uncertain global macro environment and local political shifts in 2025 have driven higher trading volumes, directly boosting fee income.
  • Structural Headwind: The "Delistings Trend" remains the primary sector concern. While the JSE is growing trading revenue, the total number of listed companies continues to decline slowly as smaller caps are taken private due to compliance costs and low valuations.

Step 4: The Verdict

Bull Case (Buy Rationale) Cash Generation & Monopoly Moat: The JSE is a cash machine with a dominant market position. Even with new entrants (like A2X), the JSE retains the lion's share of liquidity and the high-margin Information Services business. The recent 13% profit growth proves that when volatility spikes, the JSE prints money. A 5.7% yield is attractive for a defensive stock.

Bear Case (Sell Rationale) The "Shrinking Universe" Risk: If the South African economy stagnates, the trend of delistings outpacings new listings will eventually erode the annuity revenue base (annual listing fees). You are buying a highly efficient operator of a slowly shrinking pond.

Fair Value Estimate R155.00 – R165.00

  • Justification: Applying a target P/E of 13.5x (closer to its historic mean) to the forward HEPS estimates suggests upside from the current R144 levels.

Final Rating: ACCUMULATE / BUY

  • Rationale: The valuation (12x P/E) is undemanding for a company with this quality of earnings and cash flow. It acts as a perfect hedge: if the market crashes (volatility spikes), JSE revenue often goes up. It is a solid "Hold" for income, but at current prices, it offers enough margin of safety to start accumulating.
AI Generated Analysis Last Updated: 2026-01-14