* Core earnings up 15 pct to 1,062 cents per share
* Internet revenue jumps 70 percent
* Shares up 50 percent this year
By Helen Nyambura-Mwaura
JOHANNESBURG, Nov 27 China's massive but
increasingly competitive Internet market was the main driver of
15 percent first-half earnings growth for Naspers,
prompting questions over how long the company can keep growing
at such speed.
From its origins as a newspaper publisher in apartheid South
Africa, Cape Town-based Naspers has morphed into a global
multimedia business acquiring stakes in emerging-market Internet
companies including China's Tencent.
Naspers' shares have risen over 50 percent this year,
boosting its market capitalisation to $25 billion and making it
more valuable than better known media firms such as Britain's
Pearson Plc and Thomson Reuters.
But much of the growth has been driven by its 34 percent
stake in Tencent, and some analysts say the company has become
too reliant on China to fatten its bottom line - and too
"It's a wonderful business, very well run but you are
effectively investing in Chinese internet stock Tencent by
buying Naspers," said Nic Norman-Smith, chief investment officer
at Lentus Asset Management in Johannesburg.
"We think that market is a little bit competitive and the
barriers to entry for Internet companies are generally
relatively quite low, so there is a chance that a big competitor
comes out and puts Tencent under pressure."
Tencent contributed the vast majority of Naspers' earnings,
delivering 2.99 billion rand ($338 million) of the total 4.1
billion rand of core headline earnings, or earnings before
Naspers is trading at a price-to-earnings ratio of 70 times,
the tenth most expensive stock among 220 global media companies
tracked by Thomson Reuters.
However, some remain positive on Tencent.
"There are a lot of new growth initiatives that will
probably play out in the next 12-24 months, be it in mobile, or
advertising. Its coming pipeline is the strongest it has ever
been in the history of Tencent," said one Johannesburg-based
analyst who declined to be identified.
"(Naspers) can give you 30 percent growth for the next two
to three years once you are out of the development spend cycle,"
The company said it spent $530 million investing in new
e-commerce businesses including Netretail, an on-line retailer
with operations in Eastern Europe.
Management has in the past said it was finding fewer
acquisition opportunities because valuations for new purchases
were becoming expensive.
The company spent 45 percent more on development, rising to
1.6 billion rand in past six months and Chief Executive Koos
Bekker said he would be spending a similar amount in the second
"We'll look at acquisitions and if it makes sense we may
still buy companies, but the emphasis is more on organic growth
now than it is on buying something," he told Reuters.
Naspers is rolling out infrastructure for digital
terrestrial television that will make pay television affordable
to even more people in Africa, where it is in 6 million homes.
Total revenue climbed 22 percent to 23 billion rand ($2.60
billion) after Internet revenue rose 70 percent to 14.1 billion
rand. The pay television segment grew 19 percent, contributing
14.4 billion rand to revenue.
Core headline earnings came in at 1,062 cents per share in
the six months to end-September, up from 921 cents a year
It had flagged this month that underlying profit would rise
by between 10 to 20 percent. Core headline profit, which Naspers
says is its main earnings measure, excludes one-time items.
One-time items included a 1.5 billion rand ($170 million)
profit from the sale of some Facebook shares by Russian
affiliate Mail.ru. Naspers owns 29 percent in Mail.ru
Naspers' shares were down 0.4 percent to 538 rand at 1300
GMT, compared with a 0.18 percent rise by the Top-40 index.