Naspers’s share price has added nearly a third in the past three months and has more than doubled in the past year as investor excitement in its Chinese affiliate, fast-growing communications and e-commerce firm Tencent, reaches fever pitch.
On Monday morning, Naspers soared to a new record high of R1 275/share on continued demand for investor exposure to Tencent and speculation about a potential US$400m acquisition of a Chinese restaurant reviews website.
The JSE-listed media group, which owns pay-television broadcaster MultiChoice and a host of legacy newspaper assets, has seen its share price rocket higher in recent years thanks to its investments in e-commerce and other Internet assets in emerging markets. But it is its one-third stake in Tencent, which owns popular online chat platforms QQ and WeChat, which has really fired up investor interest.
Reuters reported on Monday that Tencent, which is also a big player in the videogame market in China, was trading at an all-time high, with a market capitalisation of $131,8bn.
This pushed up Naspers’s share price by almost 5% on Monday, raising its price to earnings multiple to 66 times. Its market cap exceeded R530bn for the first time.
According to Reuters, Tencent is now trading at 38 times its 12-month forward earnings, which represents a 40% premium to the historical mean.
Tencent’s latest gains come amid speculation in Chinese media that it plans to make a $400m investment for a 20% stake in Dianping, a Chinese restaurant review site. Reuters says Tencent shares surged by 99% in 2013, against the Hang Seng index, which rose only 3%. — (c) 2014 NewsCentral Media
