Naspers has upside potential: analysts

Despite forging to new highs in recent weeks, and carrying a price to earnings ratio of 51.5%, analysts believe that SA media and internet giant Naspers still has upside, and is worth more than its current elevated levels.

Naspers expects to publish its results for the year ending March 2013, next week (25 June). By close of play on Friday (21 June) shares in Naspers closed a touch below R700, having shed 2.93%  in intraday trade giving the company a market cap of R288.8 billion.

Naspers shares are 50% or R231.50 up on the year however, having reached a best figure of R765 earlier in June.

Speaking on CNBC Africa’s Hot Stoxx show, Paul Theron from Vestact said of Naspers: “It’s a fantastic success story.”

“They’ve done all these bolt on deals…a fabulous array of assets including Tencent and Mail.Ru,” he said.

The real issue is the combination of Tencent, Dstv Multichoice, worth that much (market cap)? I still think it’s got plenty of upside,” said Paul Theron from Vestact.

Chris Gilmour from Absa Investments added: “I have to agree with Paul, this is a tremendous South African success story. Yes its expensive, but you are buying quality and you are buying a proven track record.

When questioned how much Naspers could grow buy, Gilmour said: “I think much depends on where you see the Internet economy going, and I think we are really still at the very early stages frankly, I think its got an awful long way to go.

“They (Naspers) have been very clever in getting into the world’s biggest population, with the second biggest economy in the world.”

Gilmour also pointed out that the group’s operations in South Africa is often neglected. “Dstv has no real competition. TopTV has had to resort to pornography, it was rescued (financially).”

“Content really is the key, whether its in internet, or TV, or whether its in the print side,” the analyst said.

Valuing Naspers is “tricky” said Theron due to the business of putting a real value on Tencent, and the future with regard to its other businesses.

“But, what I honestly think what is being built here is the preeminent portfolio of emerging market internet and data and content assets.

“And in the fullness of time, China will liberalize, all these other assets will come to the fore, and countries like Turkey and Brazil, Poland, Russia will be very attractive to the global internet giants, so there could be some realignment with Google and Amazon, and e-bay and all these guys getting interested in this portfolio,” Theron said.

The group says it expects core headline earnings per share for the year ending March 2013, to be between 15% and 25% higher than the comparable period’s R18.50.

Nasper’s principal operations are in internet platforms, pay-television and the provision of related technologies and print media including publishing, distribution and printing of magazines, newspapers and books.

Locally, it owns online retailers, Kalahari.com and PriceCheck, pay television operation DStv, and Supersport, and Mweb.

The group holds interests in Russian Internet firm Mail.Ru Group, and Chinese group, Tencent.

More on Naspers

Naspers to buy India’s RedBus for R1.4bn: report

Naspers sees full-year earnings rise

Naspers hits new record on Tencent profit rise

Naspers in $570m Russian internet deal

Mail.Ru a cash cow for SA firm

Naspers associate to pay out special dividend

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Naspers has upside potential: analysts