The End of Naspers’ Joy Ride?

Today’s annual result has temporally given the Naspers share price a boost, despite the trading profit dropping by 32%. Naspers Limited’s share price has been trading sideways since the beginning of 2023, and with today’s result release, we can determine the company’s position from now on. You can’t discuss Naspers Limited without mentioning Tencent Holdings Limited, and the Chinese technology giant has had difficulty manoeuvring the Chinese environment.

Tencent Holdings Limited

The company had a tough week last week, with closing each day in the red, and the share price dropped by 4.65% by the end. The company has been in a challenging position as the Chinese government has cracked down on the country’s technology industry since 2021, firstly by freezing the approval of video games and restricting minors’ video game time to playing for just one hour a day and only three days a week. The share price has decreased by over half since 2021, from all-time highs of HKD 760 a share, and is currently trading at HKD 339. Furthermore, the National Press and Publication Administration (NPPA) licenses video games in China has had an eight-month licensing freeze, which ended in April 2022. The Chinese regulators were able to approve 89 new video games in June. As for Tencent Holdings, they have only received one game approved in May, despite being the world’s largest video gaming business by revenue. At the same time, the company is losing its gaming market share to NetEase and miHoYo. miHoYo Limited had a revenue surge on the back of the roaring success of its Genshin Impact title, which propelled it to its current position as the third-largest gaming company in China, after Tencent and NetEase, respectively. Meanwhile, miHoYo’s latest blockbuster, Honkai: Star Rail, launched in late April 2023, recently eclipsed Genshin Impact to become any Chinese video game’s most significant global launch. The company’s revenue streams are reasonably diversified. It has also joined the Artificial Intelligence-frenzy with its industry-orientated large language model service aimed at various traditional sectors from finance to media. Tencent posted revenue of 170.7 billion yuan for its video gaming business in 2022, down 2% from a year ago, while NetEase’s gaming revenue surged 10 percent to 74.6 billion yuan.

Naspers Limited

As to the previous results, the Group reduced its stake in Tencent from 29% to 26%, and the cash acquired from those sales was used to repurchase its shares, despite remaining bullish on Tencent Holdings Limited. On the 14th of June 2023, the company released a trading statement ahead of today’s annual results released. The business has stated that they will be exiting from several investments, and in October 2022, the Group completed the disposal and received the proceeds from the exit of the Russian classifieds business, Avito. They also stated that they would be exiting the OLX Autos (Autos) business and were completing the exit. The company also released a trading statement where they mentioned a decrease in the headline earnings per share between 21% and 28%, or 50 cents to 68 cents. They clarified by saying that “the lower contributions from equity accounted investments of approximately US$2.3bn or 506 US cents per share. Tencent is the Group’s largest equity-accounted associate and was impacted by Covid-19 lockdowns and regulations in China. Tencent has since reported its first quarter numbers for the financial year ending 31 December 2024, delivering earnings growth, as it benefits from China re-opening, a stable regulatory environment, and cost reductions.”

Figure 1: Normalised comparison in the share price for Naspers Limited and Tencent Holdings Limited


The share price has been trading sideways since the beginning of the year, following the rally after the Chinese government removed the Covid 19 restrictions in November 2022. The share price has been trading between ZAR 3450 and ZAR 3000, and yesterday the share price traded slightly below the support line. As of this morning, following the release of the company’s annual results for the period which ended on the 31st of March 2023, the share price has jumped by 9.18% at the time of writing this article. Furthermore, yesterday at the end of the trading day, the share price touched the 200-day exponential moving average, and today the share price went above the 50-day exponential moving average. The two moving averages are currently nearly parallel but have closed some distance between them since the middle of February of this year and were on course to cross.

Figure 2: Naspers Limited daily chart


This morning, Naspers released the company’s annual results for the period which ended on the 31st of March, 2023. The group revenue grew by 7% and was impacted by a broad devaluation of emerging-market and European currencies on translation to USD, representing an unfavourable foreign currency translation impact of US$2.7bn, excluding Mergers & Acquisitions. The group’s trading profit fell by 32%, and the company stated that they are committed to achieving consolidated e-commerce profitability during the first half of the financial year of 2025. Due to its strong balance sheet, the group remains well-positioned to navigate the complex macro environment, with a net debt of US$0.4 billion. Lastly, the Board of Directors of Naspers Limited and Prosus Limited announced that the two companies intend to dismantle the cross-holding structure.


Investors are reacting positively to the announcement that the company is looking to remove the cross-holding structure between Naspers Limited and Prosus Limited to address the complexity it created.  The Group still remains positive that they will achieve profitability during the first half of the financial year of 2025 for their consolidated e-commerce business. As things are, the business still has a mountain to climb but is equipped with a great balance sheet on their journey to profitability.

Sources, KoyFin, Trading View, Moneyweb, Naspers Limited and Simply Wallstreet

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