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Goldman's take on Naspers

Our most important local stock holding, by far, is Naspers. Its our largest holding in almost all JSE portfolios. In our view, it should be trading at twice the share price that it is today. The aggregate value of its various Internet and media assets far exceeds its current value on the market.

So it's pleasing when we see other market participants who hold the same view. London-based Goldman Sachs analyst Lisa Yang had this to say about Naspers in a short note issued overnight (I have lightly edited her comments, and spelled out abbreviations, to improve the readability):

    In our view, Naspers' recent underperformance was mainly driven by technicals and currency moves, overshadowing several positive developments surrounding fundamentals, transparency and improvements in the political and macro environment in South Africa. With the stock down 15% relative to JSE All Share Index over the past three months and its net asset value discount back to 41% (near all-time highs), we see a compelling entry point and reiterate our Buy rating (on our conviction list).

    We believe local selling pressure has largely played out and Naspers should benefit from an increase in foreign inflows into South Africa.

    While currency moves may be a further headwind for the stock, we note a lack of relationship historically. Additionally, a stronger Rand would benefit Naspers' Pay TV division, (22% of 2018 earnings, >100% excluding Tencent and Mail.ru).

    Disclosure and transparency have improved, and we also see management optionality to navigate technical headwinds through increasing the liquidity of their depositary receipt listing in New York, or a full dual listing.

    Fundamentals are showing a positive inflection as demonstrated by interim (6 month) results, and we expect further improvement and potential corporate action to crystallise the value of the private assets. Overall, our sum of the parts-based 12-month price target changes by around 10% to R4,198, mainly due to currency issues.


Naspers is currently trading at around R3,300 per share, so this target of Yang's at Goldman Sachs is almost 30% higher. Consider buying some more here! Of course, the trick with successful investing is to own stocks before everyone else starts liking them.


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