Research archive for NPN

Eight hundred and eighty eight eighty. 88880. That is where the share price of Naspers closed last evening, at an all time high. The intraday price was closer to 890 ZAR, within a whisker there. Why? How is that possible? The stock always looks stretched to many market commentators. Perhaps because for whatever reason we don't seem to think that the Chinese in Hong Kong have it right with their valuations of Naspers' biggest holding, Tencent. Tencent is trading at an all time high of nearly 390 Hong Kong Dollars a share, 388 to be exact. Let us do the math quickly, and borrow the "what is stake worth" in ZAR from this piece: Naspers/Tencent all growing fast!.

Naspers bucked the market yesterday, gaining 2.6 percent, but a whole lot more at one stage, nearly four percent up, and nearly regaining all of the losses in the session prior. Just shy of 843 Rand a share at the highs, the stock closed at 82882. The all time high is 847 Rand, from a few sessions ago. The stock also plunged 4.7 percent the session prior to reach an intraday low of just over 802 ZAR, so the ride has been very wild over the last few days.

Walt Disney had results two sessions ago, it is not really a stock that we cover because we don't own any. No vested interest. But we do own Naspers and there is a comparison that I'd like to make with Disney. Disney announced that the Lone Ranger was a commercial disaster, personally I hope to watch the movie in seven years time when it is hidden on one of the outer movie channels. Or perhaps never. But it turns out that unfortunately Disney overspent on the Lone Ranger, and have projected that they could lose between 160 to 190 million Dollars, and as such they have provisioned for that. I love Disney, I think all kids probably do, their movies this year have been average after a string of real winners.

I was asked yesterday as to why it was that Naspers has had such a run, why the stock price was up so much. I thought for a while and then applied myself and came up with this answer:

On Friday Naspers announced a successful bond issuance of some significance. They managed to raise $750m 6% notes due by 2020. This compared to a similar raising done by the company in 2010 of $700m at 6.375%. A lot has changed since then, the company has grown a lot but interest rates have also increased significantly in recent weeks, especially for emerging markets. According to Bloomberg this is Africa's first overseas corporate bond sale in two months following a massive pullback on emerging market funding. You see how quickly money can talk.

Naspers hit screens with full year numbers this morning. The company managed to top 50 billion Rands of consolidated revenues for the first time, a 27 percent improvement on the prior year. The internet business revenues exceeded pay TV for the very first time, so I am guessing that this is a milestone of sorts for the company. Bearing in mind that the roots of the company trace back to 1915 in the Mother City with the business of newspaper and magazine (and a little while later book) publishing being their primary business. The name Naspers is a diminutive for the original Afrikaans name, De Nationale Pers, which translates in English to The National Press. A company nowadays that hardly resembles its name in any shape or form, but we will get into that.

The wheels on the bus are going round and round, but more importantly Naspers through their Indian business Ibibo (which is held by Naspers international - MIH) have acquired a business called RedBus. Price undisclosed! Some people (dance cheek to cheek) suggest the price is 600 crore Rupees. Crore? Ten million. How much is that? Well, at the current exchange rate of 1 Dollar to 59.64 Rupees it is around 10 million Dollars. So it sounds a whole lot smaller than the amount bandied around a week ago, bearing in mind that this is quite possibly a part stake. Don't worry, more will be revealed tomorrow when we have the results from one of the best Internet and Media companies in emerging markets. First thing! We will be on the case, the presentation itself is later in the day, but the results are immediate. Exciting stuff.

The Naspers rumour mill is churning, this time about a potential acquisition in India, The Times of India reported over the weekend: South Africa's Naspers may acquire RedBus. RedBus? What is that? Well, it turns out that it is less exciting than you may think, a simple online ticketing website for bus travel across India. In classic Naspers style, they will look to acquire a stake in the business and then perhaps more as time goes on. The business RedBus just turned a maiden profit after seven years of operating, but as you can see fits the entrepreneurial spirit that Koos Bekker seems to identify so well. A stake, perhaps 30 to 51 percent, valuing the business as more than 100 million Dollars is no small cheque for Naspers, between 30 to 50 million Dollars. Naspers results this time next week, it should be exciting!

Yesterday we received a trading statement from Naspers for the full year ended 31 March 2013. Expectations for this stock are high, in the last year it is up 54%. We will look at the valuations later but I can assure you the stock is expensive. As you well know that is because it tracks the Tencent share price in Hong Kong. That stock is up 36% in the last year and trades on forward earnings of 27 times. The biggest differentiator will be movements of the Rand with a weaker Rand benefiting the Naspers price.

So what happened to Naspers stock? The share price closed up 5.7 percent to close at 699.1 ZAR, having gone through 700 ZAR during the course of the day. Remember that Naspers owns a 34.26% stake in TenCent. If you need a refresher of the last set of numbers, here goes: Naspers. Next big focus, e-commerce. But what is that 34.26 percent worth? Well, luckily for us, the business is listed in Hong Kong and has the best share code: 0700. The stock last traded (as I was writing this) at 287.40 Hong Kong Dollars. The company has a market cap of 532.65 billion Hong Kong Dollars, Naspers stake translates to 182.48 billion Hong Kong Dollars. One Hong Kong Dollar equals 1.19 ZAR. Easy, multiply the one by the other and hey presto: 217 billion ZAR. Current market cap, as of last evenings close: 290 billion Dollars.

I saw an article in the FT that Naspers have merged their two classified websites, OLX and Slando in Russia with their rival Avito. OK, who cares you say! Well, because it turns out that classifieds are huge in Russia, this combined website will be the third biggest classified website, wait for it, in the world. Yes. I checked the Avito website quickly, and the listings alone for Moscow were 2,343,359. According to the Wikipedia entry for Moscow, the population is 11,503,501. So, roughly 20 percent of Muscovites have a listing on that website. Astonishing really, if you think about it. Paul asked whether or not there was a good delivery mechanism, I said I don't know, I don't speak Russian, although my "Russian English" is very good. I do accents well you see, or at least I think I do.

I read a few articles (see here -> Mail.ru Plans $899 Million Dividend on Facebook Disposal) that suggested that Mail.ru, the London listed Russian company is going to be paying a special dividend of 900 million Dollars. So what does that mean to us? Well, Naspers owns around 30 percent of Mail.ru, their stake is worth around 10.1 billion Rands, the current market cap of Mail.ru in London is 3.84 billion Dollars.

Last Monday we looked at the Naspers trading update, this morning the company has released their results for the six months to end September. Consolidated revenue for the first half grew 22 percent to 22.597 billion ZAR, EBITDA increased 8 percent to 4.208 billion ZAR, whilst "core headline earnings per share" grew 15 percent to 10.62 ZAR. As the company always says in their results, core earnings excludes once-offs and non operating items such as unrealised forex gains or losses. The results have been boosted by the fast growing internet segment as well as benefitting from the weaker currency in the period.

Naspers issued a trading update on Friday, which saw the share price bounce off a depressed level, having been softer earlier as a result of TenCent numbers being a little shy of estimates. The stock closed at 544 ZAR, 22 ZAR off their all time highs which were reached at the beginning of the month. That is closing high, the all time high is 57790, for now that is. Over the last five years, the stock is up a whopping 192 percent. I can remember when the company was struggling, the stock actually traded below 12 ZAR a share late March 2002. Crazy. But the company was completely different back then. The company actually said in their 2002 final results commentary: "Pay television remains exposed to the vagaries of the rand and is a mature business." Pay TV was the biggest revenue generator back then, "internet" as a segment was one tenth as important. That was 2002.

On Friday Naspers confirmed the acquisition of a stake in a Dubai-based online retailer called Souq.com. Naturally I went and checked it out. Specials for Canon camera's and iPad mini's popped up while categories which include electronics, fashion, watches and jewellery, games and books also have lots of specials on offer. Souq of course is loosely a term for a market in the Arab speaking world.