N AS P E R S Online retail beckons

The share price of media and Internet company Naspers has risen about 12% since the beginning of the year, reaching a high of R1 700 on January 26.

The increase is attributed mainly to the performance of its associate company in China, Tencent, which is listed on the Hang Seng. Naspers’s share price is highly correlated to Tencent’s share movement. Naspers’s 34% stake in Tencent is amazingly worth more than Naspers’s market cap.

Tencent provides an instant messaging platform but is slowly moving into e-commerce or online retail.

In the six months to September Tencent increased revenue by 46% to R22,4bn, supported by strong growth in mobile revenue as more people began using smartphones. Its contribution to Naspers’s core headline earnings increased 41% to R6,2bn. With Mail.ru in Russia, it is the biggest contributor to the media company’s bottom line.

Though the company makes most of its money offshore, it also has profitable businesses in SA among its pay-TV and media assets.

Naspers is investing billions of rand in e-commerce, including online classified advertising businesses. The group sees ecommerce as its next biggest source of growth, especially in emerging markets.

“The so-called Naspers rump, which includes pay-TV and various e-commerce businesses in emerging markets, has recently been rerated by the market. So it’s unlikely that the rump will contribute any more significant upside potential in the short term,” says Mvunonala Asset Managers portfolio