'We continue to expect the Tencent share price to be the primary driver of the Naspers share price in the short to medium term. We see significant value in the Naspers share price at these levels,' says Ashburton fund manager Nick Crail. Qilai Shen Bloomberg
JOHANNESBURG – The shares of local tech, media and entertainment group Naspers fell 6.47 percent yesterday, continuing to take a beating from its 31 percent holding in Chinese internet giant Tencent Holding, and dragging the local bourse lower.

Naspers, with the fifth spot on the JSE, fell for the fifth day running, losing 7 percent of value this week.

Naspers has lost 34.47 percent since the beginning of the year, more than a third of its value this year, from a 52-week high of R4 142 to the current R2 657, giving the group a market cap of R1.17 trillion.

Tencent has shed more than $200 billion in market value this year, more than any other company worldwide, and has lost its spot as one of the world’s 10 biggest companies. The giant has fallen 38 percent in price since the middle of March 2018, according to Ashburton. Though Tencent returned more than 67 000 percent from its initial public offering to January, its performance has deteriorated on a run of bad news, including a rare drop in profit and a regulatory crackdown on gaming in China.

A stricter regulatory regime in China put a freeze on gaming licence approvals, which resulted in the “nonmonetisation of popular tactical tournament games” as well as a bottleneck in new product approvals.

“Most of the stuff affecting Naspers is China-related, though a stronger rand and maybe a couple of brokers are downgrading their Tencent earnings,” Peter Takaendesa, a money market manager at Mergence Investment Managers, said yesterday. He said there was optimism that the Tencent share price would bottom out and scale up once the regulatory environment in China was lifted. “It is a matter of the time frame. Tencent is one of the best growth groups and China still offers attractive growth prospects, with an economy that is still growing.”

Perpetua Investment Managers’ chief investment officer, Delphine Govender, maintains that the Naspers share price was nothing to write home about as world markets were currently in an environment where high-growth technology stocks have been bought up to extreme prices. “One of the reasons we struggle with Naspers is how much optionality of growth we have to price into the share to justify its share price,” Govender said.

Nick Crail, a fund manager at Ashburton Investments, said the correction in Naspers share price was largely correlated to the fall in Tencent share price. “We continue to expect the Tencent share price to be the primary driver of the Naspers share price in the short to medium term. We see significant value in the Naspers share price at these levels.”

Naspers is the parent company of MultiChoice, SuperSport, DStv, M-Net and Showmax in the TV media space as well as multi-platformed Media24. Its other interests are internet shopping line Takealot, internet provider MWEB as well as internet media assets including ibibo, Multiply, OLX, Buscapé, PayU, Movile, SimilarWeb and Avito.ru.

BUSINESS REPPORT