[imagesource: Dwayne Senior / Bloomberg]
In the investing game, there’s no such thing as a sure bet.
Naspers, which owns large stakes in South African companies like Media24, MultiChoice, and Takealot, is one share that has long been popular with those who dabble on the Johannesburg Stock Exchange (JSE).
During the pandemic, however, the market hasn’t necessarily behaved in a predictable manner and the recent performance of Naspers is a great example.
Writing on Moneyweb yesterday, Keith McLachlan picked out three “bizarre facts” from the JSE in recent times. He started with Naspers and how it shaped up against Eskom (not a great barometer):
The latest estimate of debt held by struggling SA power utility Eskom is said to be around R392 billion. This whopping figure, though, is dwarfed by Naspers’s (code: NPN) collapse in market cap on the JSE.
From its high on November 21, 2017, with a market cap of R1 804 billion, Naspers has fallen to a low (at the time of writing this) of a market cap of R606 billion.
This is a negative swing in value of R1 197 billion.
That means Naspers management has the dubious distinction of having wiped out more than triple the debt of Eskom…
As of this morning, the year-to-date share price shows a drop of more than 27%:
Over the past 12 months, you’re looking at just shy of 50%:
McLachlan does point out that a large part of that drop is because of Naspers’ investment in Chinese company Tencent.
Regulatory pressure in China, especially around the technology sector, has seen the conglomerate lose more than 37% in value over the past 12 months.
On CapeTalk’s The Money Show with Bruce Whitfield, McLachlan went into greater detail about the market value drop and why it has some investors worried:
Tencent has traded down and therefore has carried Naspers down with it, but – and herein lies the subtlety – management doesn’t manage Tencent, they manage Naspers and Prosus…
They didn’t have to follow it down. They could have sold, they could have unbundled… They could have done a lot of things to realise value, protect value and diversify the company. If the buck doesn’t stop with management, where does it stop?
He went on to say that recent developments have shone a light on problems with Naspers’ structure.
You can listen to that interview in full below:
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