Picture: BLOOMBERG
Picture: BLOOMBERG

JSE market heavyweight Naspers’s share price hit R3,000 in intraday trade on Wednesday. It has gained 48% so far in 2017, crossing R2,000 on December 29 2016.

Naspers started the day at R2,935.35 and soon strengthened despite trade being suspended in Hong Kong, where its 33%-held Chinese subsidiary, Tencent, is listed. Naspers’s share price on the JSE closed 2.27% up at R2,993.

Herenya Capital Advisors analyst Petri Redelinghuys ascribed Naspers’s crossing of the R3,000 level to recent gains made by Tencent.

“It is a bit surprising that Naspers jumped on a day that the Hang Seng is closed, but on the other hand, it is not that out of the ordinary that Naspers is running,” he said.

Tencent is up more than 70% so far in 2017.

Redelinghuys said Naspers was undervalued as its market cap was lower than the value of its stake in Tencent.

“Technical analysis shows R3,250 as the next target.”

Naspers’s spike above R3,000 comes ahead of Friday’s annual general meeting for shareholders in which they are set to question the group’s remuneration policies. Some shareholders are also expected to clamour further on recent calls for the unbundling of the Tencent interest.

Naspers experienced some weak trading over the past two months, dropping to R2,488 in July after a clampdown by the Chinese authorities on Tencent’s video-downloading activities.

The share price fell again later in July after the group was criticised for its exposure to social media in China that did not fit in with Chinese government policies.

Redelinghuys said it was unlikely that Naspers management would heed calls for the unbundling of Tencent. “Naspers is basically a venture capitalist company and uses Tencent’s vast dividend and cash flow to invest in new areas, including
e-commerce.” As such, the rest of the company could come under pressure if Tencent was unbundled, he said.

Management might rather consider a share split, although this was also not likely over the short-term.

“E-commerce, notably Takealot, is the way to go for the future and a price of R4,000, or even R5,000 for Naspers in the longer-term, is a real possibility,” Redelinghuys said.

mittnerm@fm.co.za

 

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