Naspers Recovery From Second-Worst Stock Hinges on Profit Growth

Naspers Ltd. (NPN), Africa’s largest media company, needs to convince investors it will grow profit if South Africa’s second-worst performing stock this month is to curb a slide led by its stake in a Chinese company.

Naspers, which owns 34 percent of Tencent Holdings Ltd., China’s biggest Internet company, has declined 9.5 percent this month, making it the worst performer on the 42-member (TOP40) FTSE/JSE Africa Top 40 Index in March after Kumba Iron Ore Ltd. The gauge of South Africa’s largest and most liquid stocks gained 0.4 percent over the same period.

“It’s just Tencent,” Kevin Mattison, an equity analyst at Avior Research (Pty) Ltd. with a neutral recommendation on the stock, said by phone from Cape Town yesterday. “You must remember that the stock had a phenomenal run for many years and if you go and look at the movement in Tencent (700), it explains most of Naspers’ movement in rand terms over the last month.”

Tencent, which trades in Hong Kong, slumped 16 percent this month as the company missed fourth-quarter profit estimates. It bought a 15 percent stake in Chinese e-commerce site Inc. and a 20 percent share of E-House China Holdings Ltd.’s Leju Holdings Ltd.

Naspers trades at 65 times historic earnings, making it the third-most expensive stock on the Top 40 gauge after miners Anglo American Platinum Ltd. and AngloGold Ashanti Ltd. The shares declined 0.8 percent to 1,175.04 rand in Johannesburg yesterday. The company didn’t immediately respond to telephone and e-mail requests for comment.

Naspers Chief Executive Officer Koos Bekker, who will be replaced by Bob van Dijk on April 1, said last month the Cape Town-based company should focus on e-commerce in order to drive future growth.

“Naspers’ shares are trading at a fairly demanding multiple and they’ll need to demonstrate they’re going to deliver the earnings that the market is now expecting of them,” Mattison said.

To contact the reporter on this story: Jaco Visser in Johannesburg at

To contact the editors responsible for this story: Vernon Wessels at John Bowker, Ana Monteiro

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