Naspers breached R2,000 in November 2015 and reached a record high of R2,553.59 on September 5, causing the price:earnings ratio to spike to 105 times. This raised questions if its remarkable run could continue. The market heavyweight is down 5% for the week and an annual 2%. It became more pertinent at last week’s trading update, when it said headline earnings per share would rise 10%-15% to September 30, but earnings per share would be 10%-15% lower. The market was not impressed, more so after Tencent, Naspers’s 34% Chinese investment, which has a bigger market cap than Naspers, traded lower in Hong Kong. At issue is the expected growth at Naspers, which seems adequate on face value. However, to justify the high price:earnings ratio, Naspers needs to grow at least 20%-30% over the next 100 years, which seems unlikely. The hard reality is that Naspers is still over-reliant on Tencent, with the other investments, notably in e-commerce, not delivering the required growth rates to aug...
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