ARTICLES

Naspers

Naspers is the largest share on the JSE with a market capitalisation of R1,67 trillion. Naspers was founded in 1915, as a printer and publisher of newspapers and magazines. It has since evolved into an international social media, entertainment and gaming company.

This share has the problem that it is undervalued in relation to the value of the assets which it owns. It is common for investment holding companies to be undervalued, but Naspers generally trades for around 50% of the value of the listed shares which it owns. Most notable is its 73% stake in Prosus (listed on the Euronext in Amsterdam) which, in turn, owns 31% of the Chinese social media and gaming giant, Tencent.

Naspers’ stake in Tencent is worth just less than a staggering R3 trillion.

The CEO of Naspers, Bob van Dijk, has been trying to close the gap between its net asset value (NAV) and its share price, which he says is the main pre-occupation of the board. Their efforts have included the splitting off of first Multichoice (MCG) listed on the JSE and subsequently the separate listing of Prosus (PRX) in Europe. The company has also undertaken the largest share buy-back in South African history (worth R82bn).

Van Dijk’s efforts have been in vain because the discount of Naspers shares to its NAV persists and has actually widened. One of the main reasons for the discount is the fact that the company maintains an out-dated “N-share" structure where the “A” ordinary shares have 1000 times the voting power of the listed “N” shares. Through this mechanism, the 961193 “A” ordinary shares have about two thirds of the voting power in the company even though they have contributed only a miniscule fraction of its capital.

In October 2018 and again in January 2020 we drew attention to the fact that Naspers represented a great investment opportunity for private investors. It has since released a considerable amount of that value into the hands of its investors with both the Multichioce and Prosus listings. We expect it to continue to find ways to unlock the value tied up in the company. So, at around R3834 per share we consider Naspers to be good value. Consider the chart:

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