In the wake of the most recent financial report that revealed a profit dip, Naspers Limited (JSE: NPN) found itself navigating through the choppy waters of geopolitical and macroeconomic uncertainty. Despite this challenge, there’s an intriguing twist in the story. Shareholders remain optimistic about the company’s future, driven by Naspers’ bold move to dismantle its cross-holding structure with Prosus. Moreover, the changing of the guard at the helm, with Ervin Tu stepping in as the interim CEO after Bob van Dijk’s departure, adds an element of anticipation to the company’s unfolding narrative.
In the financial report for the year ended 31 March 2023, Naspers reported consolidated revenue of $6.8Bn, a 20% expansion from the prior $6.29Bn, driven by improved performance in its Food Delivery segment, which grew 40% from $2.99Bn to $4.2Bn. Its Payment and Fintech segment further increased by 32% to $1.05Bn as its top-line momentum continued. However, core headline earnings slumped by 48% to $1.1Bn, mainly attributed to lower associate contributions from Tencent, which was heavily impacted by COVID-19 lockdowns and regulatory pressure in China. Profit attributable to equity holders faltered from $12.22Bn to $4.33Bn, as the share of equity-accounted investments fell from $9.25Bn to $5.18Bn, while gains on the partial disposal of equity-accounted investments further fell from $12.34Bn to $7.62Bn. Diluted earnings per ordinary share fell from 1,888 US cents as a result, a sharp contraction from the prior 4,116 US cents. However, with new management at the helm, optimism remains that Ervin Tu can guide the groups from a period of substantial investment toward ensuring value crystallization.
Technical
On the 1D chart, the share price peaked in the first week of August, following the earnings release. Since then, a descending channel has formed, confirmed by the crossing of the 50-SMA (blue line) above the 25-SMA (green line). With dynamic support recently found, the channel resistance could be at risk of a breakout in the upcoming sessions.
Resistance at R3120.81 could be the level to look out for in the upcoming sessions, as a breakout above could send the share price above the 25-SMA in a signal of a reversing shorter-term trend. In this case, the price could converge toward the 50-SMA, where the Fibonacci midpoint could come into play at R3255.84 from the potential bottom of the current trend. The 61.8% Fibonacci golden ratio would be next in line, offering further resistance at R3325.67, which could limit the upside.
However, if the resistance at R3120.81 prevents a breakout, the current descending channel could remain in play, potentially resulting in a retracement toward support at R3053.88. Lower support is established at R2961.21, where a breakdown of the dynamic support of the channel could lead the price toward R2901.68 in the longer term.
Summary
Sources: Koyfin, Tradingview, Naspers Limited
Despite the slowdown of profit in its recent earnings report, the share price advanced over 8%, with investors optimistic over the allowance of Naspers to continue its share repurchase program, which has already unlocked $29Bn of value. A key level to look out for in upcoming sessions is the resistance at R3120.81, where the price could break out toward R3255.84 or continue in the channel toward R2961.21.
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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