SIN stocks have toppled the JSE's traditional resources heavyweights as the South African stock exchange's biggest companies.

British American Tobacco is the JSE's biggest company with a market capitalisation of R787bn, and SABMiller this week overtook BHP Billiton as the JSE's second-largest company. At yesterday's closing prices, SABMiller had a market capitalisation of nearly R529bn, ahead of BHP Billiton's R523bn.

Over the past three years, the London-based brewer's share price has more than doubled. They closed yesterday 1,23% up at R317,85.

Analysts attribute SABMiller's strong share price to speculation that the second-largest brewer may be a takeover target of the largest.

"There is undoubtedly some underlying speculation that Anheuser-Busch InBev will make an offer for SABMiller," UK-based Sanford C Bernstein European beverages analyst Trevor Sterling said.

"The stock is fairly valued, though it may be a little expensive compared to its peers. There is definitely a bid premium in the stock."

Last year Goldman Sachs touted the company as a potential takeover target by Anheuser-Busch InBev, the owner of Budweiser beer.

The report said SABMiller would present an attractive target given its emerging markets exposure and the long-term growth opportunities, particularly in Asia and Africa. Investec analyst Anthony Geard said speculation that Anheuser-Busch InBev may make a bid for the company in the next three years may be helping the share price.

"SABMiller management is very well regarded, and the stock has looked after fund managers for a long time - no one wants to sell a winner. Its emerging market assets give it high growth potential."

Avior Research analyst De Wet Schutte said the share price looked "punchy" compared with other consumer staples.

"The company is growing nicely, the market seems to be pricing in for growth and perhaps a little extra. It is a great emerging markets story."

The company has been investing in Africa, where lager volumes grew 11% in the third quarter, despite strong comparatives and capacity constraints in some markets.

Last year it said it would spend $260m to fund capacity expansion in its subsidiaries in Uganda, Ghana, Zambia and Tanzania.

Last month it said gains in emerging markets lifted lager volumes 3% and soft-drink volumes 6% in the third quarter, offsetting poor results from the maturer US and European markets. "Organic, constant currency group revenue grew 7% for the quarter, while group revenue per hectolitre grew 3% on the same basis," the company said.

SABMiller yesterday said it could not comment on speculation.

valliea@bdfm.co.za