Naspers up on rand, Tencent dips

Naspers has outperformed its investment in Tencent over the past month thanks to the weaker rand and the possibility of it receiving a handsome return on its investment in Indian e-commerce platform Flipkart. /

Naspers has outperformed its investment in Tencent over the past month, thanks to the weaker rand and the possibility that it could receive a handsome return on its investment in Indian e-commerce platform Flipkart. Naspers’s stock has lifted nearly 2% since April 9, while Tencent has slipped 5% over the same period.

Naspers, a rand-hedge stock, has benefited from a 5% weakening in the rand over the past month, with the local currency trading at R12.62 to the US dollar on Tuesday afternoon.

Vestact portfolio manager Byron Lotter said Naspers may also have benefited from recent reports that Walmart would soon announce that it was buying a majority stake in Flipkart.

Reuters reported that the deal would value Flipkart at between $18bn and $20bn, implying that Naspers’s stake could be worth $3bn.

Naspers is expected to hang on to some of its shares.

“I think the price is good, it’s been a great investment [for Naspers],” Lotter said.

Meanwhile, Lotter said it was “a bit frustrating” that most investors saw Naspers purely as an investor in Tencent, though “the market can only be inefficient for so long”.

Naspers is trading at a hefty discount to the value of its portfolio, with investors essentially valuing the group’s non-Tencent assets at zero.

Vestact portfolio manager Michael Treherne has punted the idea that Naspers should list in Hong Kong, where investors understand Tencent well.

Lotter said: “If they had a listing there then the Naspers share price should at least close the gap [somewhat] … Hong Kong is a very liquid and sophisticated market. We would like to see some sort of action taken towards closing that gap.”

Secondary listings abroad, rather than selling the bulk of its Tencent holding, would be positive for Naspers. The company sold R116bn worth of Tencent shares in March. Lotter said it could make sense for Naspers to use the proceeds of a Flipkart share sale to buy back some of its own undervalued shares.