Our opinion on the current state of NASPERS-N(NPN)
Naspers (NPN), Africa's largest company, is a massive international social media, gaming, and IT company whose main asset is its 73% ownership of Prosus (PRX), which in turn owns 26% of Tencent, a Hong Kong-listed company providing social media services and gaming in China. Tencent has 10 of China's 20 top mobile applications, reaching over 1.1 billion users. Naspers itself has an archaic capital structure where it is dominated by its 907,128 unlisted "A" ordinary shareholders. Each "A" ordinary share has 1,000 times the voting power of the 438.3 million "N" shares which are listed, effectively controlling the company with 67.4% of the vote.
Naspers has many other interests, mainly in e-commerce, and operates in 120 countries worldwide. It has recently bought a further $500 million worth of shares in Letgo, an American classifieds platform with more than 100 million users. It also owns Takealot and Mr. D Food in South Africa, among other interests, but all those other investments are dominated by Tencent. The share's discount to its inherent value is mainly because of its "N" share structure, which is frowned upon in the investment community.
Naspers has retained its online shopping operations, including Takealot, Mr. D. Food, PayU, and Autotrader. On 11th September 2019, Naspers separately listed Prosus on the Euronext in Amsterdam, housing all its international assets including its stake in Tencent, Mail.Ru, and other internet brands. Naspers held 73% of Prosus, and there was a 25% free float. The company has a secondary listing on the JSE. One of the benefits of the Euronext listing is that it removes the risk inherent in the rand. Prosus is now Europe's largest consumer internet company.
Tencent continued to grow through the pandemic as more people turned to online gaming. On 27th January 2023, Bloomberg announced that Naspers intended to retrench about 30% of its workforce. In its results for the six months to 30th September 2023, the company reported revenue from continuing operations up 9% and core headline earnings up 90%. The company said, "This was primarily due to improved profitability of our e-commerce consolidated businesses and equity-accounted investments, particularly Tencent, and higher net interest income during the period. At 30 September 2023, the ongoing open-ended share repurchase programme has reduced the Naspers net share count by 14% and generated US25bn for our shareholders."
In a trading statement for the year to 31st March 2024, the company estimated that HEPS would rise to between 669c and 677c (US) compared with 119c in the previous year. Technically, since October 2022, the share has staged a recovery, and then moved sideways between March 2023 and April 2024. Since then, it has broken to new higher levels. We still regard this share as under-priced at the current price.
On 18th September 2023, the company announced that Bob van Dijk would resign as CEO with immediate effect. On 17th May 2024, the company announced that Fabricio Bloisi would take over as CEO of both Naspers and Prosus with effect from 1st July 2024.
Overall, Naspers continues to show strong financial performance and strategic growth. The ongoing share repurchase program, the robust performance of Tencent, and the new leadership under Fabricio Bloisi suggest potential for further appreciation. Despite the complexities of its share structure, the company's diverse portfolio and substantial assets make it an attractive investment, particularly at its current undervalued levels.
Naspers has many other interests, mainly in e-commerce, and operates in 120 countries worldwide. It has recently bought a further $500 million worth of shares in Letgo, an American classifieds platform with more than 100 million users. It also owns Takealot and Mr. D Food in South Africa, among other interests, but all those other investments are dominated by Tencent. The share's discount to its inherent value is mainly because of its "N" share structure, which is frowned upon in the investment community.
Naspers has retained its online shopping operations, including Takealot, Mr. D. Food, PayU, and Autotrader. On 11th September 2019, Naspers separately listed Prosus on the Euronext in Amsterdam, housing all its international assets including its stake in Tencent, Mail.Ru, and other internet brands. Naspers held 73% of Prosus, and there was a 25% free float. The company has a secondary listing on the JSE. One of the benefits of the Euronext listing is that it removes the risk inherent in the rand. Prosus is now Europe's largest consumer internet company.
Tencent continued to grow through the pandemic as more people turned to online gaming. On 27th January 2023, Bloomberg announced that Naspers intended to retrench about 30% of its workforce. In its results for the six months to 30th September 2023, the company reported revenue from continuing operations up 9% and core headline earnings up 90%. The company said, "This was primarily due to improved profitability of our e-commerce consolidated businesses and equity-accounted investments, particularly Tencent, and higher net interest income during the period. At 30 September 2023, the ongoing open-ended share repurchase programme has reduced the Naspers net share count by 14% and generated US25bn for our shareholders."
In a trading statement for the year to 31st March 2024, the company estimated that HEPS would rise to between 669c and 677c (US) compared with 119c in the previous year. Technically, since October 2022, the share has staged a recovery, and then moved sideways between March 2023 and April 2024. Since then, it has broken to new higher levels. We still regard this share as under-priced at the current price.
On 18th September 2023, the company announced that Bob van Dijk would resign as CEO with immediate effect. On 17th May 2024, the company announced that Fabricio Bloisi would take over as CEO of both Naspers and Prosus with effect from 1st July 2024.
Overall, Naspers continues to show strong financial performance and strategic growth. The ongoing share repurchase program, the robust performance of Tencent, and the new leadership under Fabricio Bloisi suggest potential for further appreciation. Despite the complexities of its share structure, the company's diverse portfolio and substantial assets make it an attractive investment, particularly at its current undervalued levels.
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