Naspers trading update

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.


Here is what the company had to say in the update: "We expect core headline earnings per share to be between 15% and 25% higher than the comparable period's 1 850 cents. The majority of our core headline earnings are generated from operations offshore. As a consequence, the currency translation effect of the depreciation of the Rand relative to the prior period will play a significant role in boosting expected core headline earnings growth.
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.


Headline earnings per share for the period are expected to be between 25% and 35% higher than the prior period's 1 297 cents.

It is expected that earnings per share for the year ended 31 March 2013, will be between 100% and 110% higher compared to the prior period's 770 cents, mainly as a consequence of the book profit flowing from Mail.ru's sale of a portion of its shares in Facebook, which is non-recurring."


As they mention, it is the core headline earnings per share which is important because that reflects what to expect in the future. If they take the cash realised from the Facebook sale and buy a business which falls under the Naspers umbrella then that will filter into future core headline earnings per share. History tells us that the Naspers management are the best people around to allocate that money.


If we take the middle of the range 20% and add it to the 1850c made last year we get 2220c. That puts the stock on forward earnings of 32, currently trading at R712. As we have said many times about this stock, it is the sum of the parts which is important. We will do a full analysis when the full numbers come out on the 25th of June. Sasha is an expert at valuing the separate Naspers Businesses so expect a full sum of the parts analysis at the end of this month.