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The value of shares in South Africa’s largest media group, Naspers, is booming and there is, seemingly, no end in sight.
The latest upward surge follows the release of a spectacular trading update this week by Chinese tech-giant Tencent of which Naspers owns 35 percent.
“Naspers is, basically, booming on the back of more people in China playing games on their phones,” says Jean Pierre Verster, Analyst at 36One Asset Management.
The value of Naspers’ investment in Tencent is about R750-billion, which represents an astonishing 99 percent of the entire Naspers market cap of R757-billion.
“Tencent has been a great investment for them,” says Verster. “They made it in 2001 and it cost them only $35-million. Since then it has grown 200 times."
Naspers is trying to diversify its holdings through investments in companies such as online classifieds business OLX and India’s Flipkart.
“It’s a nice problem to have when your biggest investment is also your best performing one,” says Verster.
Verster says he wouldn't be surprised if the Naspers share price breaks through R2000 in the next few days. It was trading at R1777 late on Friday morning.
“Even at a PE of 100, we see a lot of value in Naspers, ” explains Verster.
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