DURBAN/JOHANNESBURG - Naspers fell more than 10 percent on the JSE yesterday, dragging both the JSE all-share index and Top40 indices down.
Naspers ended the day 8.2 percent lower at R3 060.88 as the news that the Chinese internet giant Tencent, in which it owns a 31 percent stake, reported results that were below market expectations.
Tencent reported that operating profit declined by 3 percent to $3.3 billion (R46.94bn) year on year in the three months to June. Operating margin decreased to 30 percent from 40 percent as compared with last year.
Tencent has lost more than $160bn of market value since its January peak, according to Bloomberg, which has placed pressure on Naspers.
Roughly $15bn of Tencent’s value evaporated on Tuesday after regulators told Tencent to remove the newly released Monster Hunter: World from its PC downloads service.
Naspers is one of the largest investors in the JSE, with its stock making more than 15 percent of the bourse’s total market capitalisation.
The JSE all-share index tumbled 3.41 percent to 55 646.15 points on the news and the Top40 index 3.76 percent to 49 615.06 points.
Old Mutual fund manager Arthur Karas said Naspers’s size also attracted a lot of risk.
Karas said: “Realistically, it is unlikely that Naspers will continue to outperform forever, so there may very well come a time when holding this particular stock will turn on investors and fund managers need to have the conviction in their investment approach to make the appropriate call for their clients.”
Analysts said the Tencent fall underscored in cash cow mobile game Honour of Kings.
Ron Klipin, of Cratos Capital, said the easing of the Tencent stock could be attributed to a slowdown in the high-growth mobile gaming revenues.
Klipin said Chinese authorities also appeared determined to tighten regulations in mobile gaming revenues.
“Tencent is a diversified Telecoms ICT, with good prospects in e-commerce and messaging.
"New ventures should help growth prospects in the future as they add to profitability,” he said.
Naspers has so far resisted investor pressure to spin off its stake in Tencent, due to a widening discount between its market value and that of its one-third stake in the Chinese internet company.
Naspers has cut its exposure to the Chinese group slightly. In March the company raised $9.8bn from the sale of a 2 percent stake in Tencent, to strengthen its balance sheet and fund growth in its e-commerce businesses.
Last month Naspers chief executive Bob van Dijk said in an interview that Naspers was considering the listing of business.
“The company takes 'very seriously' the difference in value between its stake in Chinese internet giant Tencent and the firm as a whole,” he said.
Naspers’s weighting on JSE was also too high, he added.
“The logical next step would be to list parts of the business to see how we can reduce the overall size,” Van Dijk said. “We are discussing it with our board.”
Last month Naspers’s remuneration committee was criticised after Naspers paid its executive directors a generous combined $18.86 million during the year to March.