South Africa's Naspers Climbs Valuation Ladder -- WSJ

By Alexandra Wexler Features Dow Jones Newswires

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 30, 2017).

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JOHANNESBURG -- Africa's most-valuable company has become this year one of the world's most-valuable companies, too.

On Wednesday, Naspers Ltd. -- a media and internet firm little known outside South Africa and Silicon Valley -- reported a surge in half-year earnings. The performance, bolstered by the company's 33.3% stake in Chinese internet giant Tencent Holdings Ltd., sent the stock up 0.8%, bringing its gains over the past 12 months to 84%.

Naspers, which was founded in 1915 as a newspaper publisher, is now the world's 65th largest listed company by market value among the Stoxx Global 3000 index. Last year, it wasn't close to breaking into the top 100, according to a Wall Street Journal analysis.

The climb has been driven almost entirely by Tencent's own soaring share price. In 2001, Naspers paid $34 million for its stake in the Chinese company. Based on Tencent's current market capitalization, that holding is now worth about $170 billion; however, investors have baked in a discount for Naspers shares because of a dividend-withholding tax that would kick in should it ever sell out. Naspers's market cap ended Wednesday at about $121 billion.

Apart from Tencent, Naspers holds stakes in a host of other companies, including Mail.ru Group, a Russian internet company that runs two of the country's three biggest social networks, Delivery Hero, a food-delivery company based in Germany, and Flipkart, India's biggest e-commerce site.

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"The market is actually paying you to take on all these other great assets," said Philip Short, an analyst at Old Mutual Equities, in Cape Town.

Naspers said its net profit for the six months ended Sept. 30 rose 98% to $1.1 billion, while revenue rose 5% to $3.1 billion. The income largely came from its Tencent holdings and its global digital classified businesses, which turned profitable for the first time.

Its Tencent bounty has afforded Naspers what is essentially a silent partnership in some of the tech world's splashiest investments of late. Earlier this year, Tencent bought a 5% stake in Tesla Inc. and a 12% stake in Snap Inc. In 2016, it bought Finland's Supercell, maker of the "Clash of Clans" mobile game franchise.

Last year, Naspers also opened a venture-capital outfit in Silicon Valley to be closer to the tech-innovation hub.

In recent years, the company has been quietly taking on much bigger business rivals. It launched a streaming service called ShowMax across Africa in 2015, just ahead of Netflix Inc. Naspers is also going toe to toe with Craigslist Inc. in the U.S., with a mobile app called LetGo.

Nasper was established as De Nationale Pers Beperkt, or the National Press Ltd., to produce a Dutch-language newspaper for South Africa's Afrikaner population. The company and its publications became mouthpieces for the National Party, which came into power in 1948 and instituted the system of racial segregation known as apartheid.

Mike Bird

in London contributed to this article

Write to Alexandra Wexler at alexandra.wexler@wsj.com

(END) Dow Jones Newswires

November 30, 2017 02:47 ET (07:47 GMT)