[dropcap]N[/dropcap]aspers shares rallied to an all-time high on Monday amid continued optimism over the growth prospects of its Chinese affiliate, Tencent. The share touched a new high of R2 873.93 in afternoon trade on the JSE, before closing up 1.9% at R2 860.
The South African-headquartered Internet and media giant has rallied strongly in recent weeks on bullish sentiment towards Tencent, in which it holds a more than 33% stake. It has a market capitalisation of more than R1.2 trillion, making it the largest company with a primary listing on the Johannesburg bourse.
Tencent’s shares have risen in recent days on reports that Chinese authorities are cracking down on WhatsApp, the instant messaging platform developed by Facebook. Investors see Tencent benefiting from the Chinese authorities’ move, despite WhatsApp’s relatively small market penetration in China. Tencent develops the market-dominant WeChat platform.
Tencent closed in Hong Kong on Monday at HK$302.20, up 1.8% on the session, giving the company a market capitalisation of HK$2.9 trillion (R4.7 trillion), meaning Naspers is trading at a hefty discount to the value of its stake in the Chinese Internet giant.
The South African company last month came under pressure to unbundle its stake in Tencent to shareholders, with Albert Saporta, a director of Swiss investment advisory AIM&R penning a strongly worded open letter to Naspers CEO Bob van Dijk, accusing him of destroying hundreds of billions of rand in shareholder value. He criticised the growing discount between Naspers’s valuation and that of Tencent.
Saporta said Naspers investors were being punished twice, first because investing directly in Tencent would have earned a 35% return, above the 24% Naspers delivered, and second because other companies in the Naspers stable, including pay-television operator MultiChoice, were “being implicitly and constantly devalued to the point of reaching a significant negative value”.
He also criticised the fact that Van Dijk’s remuneration is based on a share option plan that rewards him for an increase in Naspers’ share price “for which you are absolutely not responsible”.
On Friday, Bloomberg reported that Van Dijk has been awarded US$10.4m in new long-term share options in the 2017 financial year. That came on top of a salary of $2.2m in pay and bonuses in the year to 31 March 2017. — (c) 2017 NewsCentral Media