Naspers trading statement

Naspers released a trading statement this morning. Seeing as the company is always pretty hard to value as a function of the outlandish sized (in Rand terms) position in Tencent (They own 33.85 percent of the Chinese internet/entertainment company), the numbers sometimes don't represent the full picture. Here goes, anyhow, the trading update this morning: "We expect core headline earnings per share to be between 37% (2 093 cents) and 42% (2 170 cents) higher than the comparable period's 1 528 cents. Shareholders are reminded that the board considers core headline earnings an appropriate indicator of the sustainable operating performance of the group, as it adjusts for non-recurring and non-operational items."

That still means for the "purists", who wouldn't want to own them at 500 Rand, 1000 Rand, 1500 Rand or even the closing price of 2149.18 Rand last evening, that on a 50 plus multiple (if you annualise these earnings) that the stock is still wildly expensive. Interesting to note however that the stock is actually cheaper on a fundamental basis than it was before. In other words, even though the stock price has gone up sharply, earnings have caught up sharply. The full half year results are expected to be released on the 27th of November, next Friday.

There is more in the trading update: "It is expected that earnings per share for the six months ended 30 September 2015, will be between 10% (2 023 cents) and 15% (1 911 cents) lower compared to the prior period's 2 248 cents." Most of this is likely as a result of heavy spend in their ecommerce business, ramping that up sharply. If you could compare that division to another at a global level, you would have to say Amazon. Amazon are spending like crazy to build a huge network, in order to roll out the biggest retailer known to mankind, it may take another decade and a half, I am sure it is bound to happen, when Amazon profits eclipse those of Walmart. I am not too sure what to make of the numbers, at face value it looks pretty decent. And Tencent is completely flat, so, for all intents and purposes, the move from Naspers today might well actually look directly at these numbers.