Naspers Limited (JSE: NPN) released its latest financial results on Wednesday, showcasing an impressive 112% surge in half-year profit. The stellar performance was fuelled by the robust contributions of its e-commerce ventures and Tencent in China, propelling the company’s overall financial success. Notably, the e-commerce portfolio is now on the cusp of reaching breakeven, marking a significant milestone.
Anticipating even greater gains, the company now foresees these investments turning profitable in the second half of the current financial year, surpassing initial expectations by six months. This optimistic outlook follows a remarkable 85% reduction in trading losses within the e-commerce business, narrowing from $270 million to $38 million.
Highlighting the broader financial picture, core headline earnings per share saw a substantial rise from 214 US cents to 454 US cents. Meanwhile, revenue from continuing operations experienced a notable 14% increase, reaching R3 billion.
Adding to the company’s impressive narrative, its subsidiary, Prosus, strategically managed its stake in Tencent, reducing it from 25% to 26.2% over the past six months to facilitate a rolling share buyback program. This proactive approach underscores the company’s commitment to creating shareholder value.
In closing, management’s positive remarks emphasized the group’s robust balance sheet and active portfolio management. This strategic positioning is expected to generate enhanced returns, showcasing the company’s dedication to benefiting all shareholders through prudent and effective capital deployment.
Technical
On the 1D chart, a descending channel formation became a victim of a bullish breakout, leading the share price toward a sustainable bullish rally, exceeding the 25-SMA (green line), 50-SMA (blue line), and 100-SMA (orange line). However, a sideways consolidation pattern has emerged atop this uptrend, with investors anticipating the next directional price move.
Resistance at R3,501.79 could be a critical level to look out for in upcoming sessions. Failure to exceed this level could result in continuous consolidation, with support at R3,376.41 preventing a bearish breakdown. If the price moves below this support, a retracement toward the prior 61.8% Fibonacci golden ratio could occur, where the 25-SMA provides additional support close to R3,285.44.
Conversely, a leg above the R3,501.79 resistance could trigger a continuation of the current uptrend. A supply zone is established at R3,574.87, presenting the first potential hurdle to the uptrend’s continuation. Should this zone be cleared, the path could be open for convergence with higher resistance at R3,609.49.
Summary
After a promising half-year earnings report, Naspers’ share price is consolidating in anticipation of a directional price move. Resistance at R3,501.79 could be crucial to determine whether the uptrend will continue or whether a pullback toward R3,376.41 is on the cards.
Sources: Koyfin, Tradingview, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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