Industry-Specific Equity Valuation Practices: Evidence from South African Equity Research Reports

Valuation methodologies vary across industries because firms differ in capital intensity, asset life, earnings stability, and exposure to risk. This study examines the valuation approaches used by South African equity analysts across the diversified mining, platinum group metals mining, gold mining, retail, and banking sectors over the 2018–2026 period, with non-financial firm coverage extending to 2024 and banking sector coverage extending to 2026. Using qualitative document analysis of 201 equity research reports covering 24 Johannesburg Stock Exchange-listed companies, including 19 non-financial firms and the five largest South African banks, the study identifies clear clustering of valuation methods by industry. The findings show that resource-based sectors are predominantly valued using intrinsic approaches such as life-of-mine discounted cash flow (DCF) and risk-adjusted net present value (NPV), while retail firms are primarily valued using earnings-based multiples. Gold mining exhibits a hybrid valuation pattern, and banking institutions are valued using balance-sheet- and profitability-based approaches anchored on book value, return on equity, and dividend flows. Overall, the results suggest that valuation practices in the sampled equity research reports are strongly industry-specific and broadly aligned with the underlying economic characteristics of the sectors analysed. The study contributes to the limited empirical literature on professional valuation practice in African capital markets and provides insights relevant to analysts, investors, and regulators.