ROB ROSE: David 1, tech goliath Naspers 0
Naspers leant on Investec analyst David Smith to ‘recall’ a negative research report about it. Instead, he stuck to his guns
It’s not often that a mild-mannered accountant gets to stare down a bullying trillion-rand company. Yet David Smith, an equities analyst at Investec Securities, has resisted a full-throttle onslaught from Naspers, which took exception to a 30-page report he wrote on January 22 that failed to flatter the R1.4 trillion tech goliath as it presumably might like. Smith argued that Naspers isn’t as grievously undervalued as some say, and it "deserves" to trade at a 30% discount to its assets. He also argued that its internal rate of return is closer to 11% than the higher 17% Naspers puts it at — an important gap, considering Naspers’s cost of capital is 13%. It wasn’t flattering, sure. But equities analysts are not there to soothe egos. Rather, they’re meant to act independently, their research contributing towards price discovery and a more transparent market. The thing is, for the past two years the gains in Naspers’s share price have been entirely due to its high-flying Chinese invest...
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