Naspers is a prominent multinational media group which has, over the last two decades, evolved from a traditional print media business in one country to a broad-based e-media company in multiple markets. Naspers' most notable investment is Prosus, which in turn has a large shareholding in Chinese internet giant Tencent. Prosus is focused on eCommerce, Food Delivery, and Classifieds.
Technically, a price that appears to be developing an inverse head and shoulders pattern makes the share attractive as an investment opportunity (see the overlay and the insert on the main chart).
The pattern is formed by three consecutive troughs, where the middle trough (the head) is lower than the two surrounding troughs (the shoulders). The pattern resembles an upside-down head and two shoulders.
After a prolonged decline in the price, the share typically experiences increased buying pressure near the shoulders and the head, signalling that the downtrend may be coming to an end.
According to the RSI (Relative Strength Index), the stock will be overbought at ~R4 155. This classifies our profit target of R4 100 as realistic. We suggest a medium capital at risk allocation to this trade.
Share Information
| Share code | NPN |
|---|---|
| Industry | Consumer Discretionary |
| Market Capital (ZAR) | 1530.35 billion |
| One year total return | 49.22% |
| Return year-to-date | 24.14% |
| Current price (ZAR) | 3 506.19 |
| 52 week high (ZAR) | 3 582.66 |
| 52 week low (ZAR) | 1 694.37 |
| Financial year end | March |
| Closing paragraph | The stock remains above its 200-day simple moving average, suggesting a continuing bullish trend. Year-to-date performance has been solid. |
Consensus expectations
(Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (ZAR) | 4.27 | 11.63 | 14.77 | 20.38 |
| Growth (%) | 172.37 | 27.00 | 38.01 | |
| Dividend Per Share (ZAR) | To be announced | 0.38 | 1.00 | 1.58 |
| Growth (%) | N/A | 164.02 | 57.82 | |
| Forward PE (times) | 17.02 | 13.40 | 9.71 | |
| Forward Dividend Yield (%) | 0.19 | 0.50 | 0.80 | |
| Closing paragraph | Strong earnings growth over the near-term which is expected to taper off but remains good, nonetheless. | |||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position |
TFG - Profit Take (Close the position) |
ABG - Profit Take (Close the position) |
OMU - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 83.54 | 169.90 | 11.67 |
| Current | 107.69 | 188.50 | 12.90 |
| Movement | 28.9% | 10.9% | 10.5% |
| Summary text | We suggest taking profit early as the share is testing its 200-week simple moving average. We might consider re-entering the trade at a later stage. | We suggest taking profit early to reduce portfolio risk. |
The price displays a potential reversal of a bearish trend. The share remains above its 200-day simple moving average. Upside momentum supports the bullish trend.
Our profit target is R16, with a trailing stop-loss at R11. Exit the trade around 17 November 2023. |
| Share Name and position |
DCP - Buy (Continue to hold) |
INL - Buy (Continue to hold) |
MTN - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 24.12 | 105 | 182.66 |
| Current | 25.70 | 111.50 | 191.66 |
| Movement | 6.6% | 6.2% | 4.9% |
| Summary text |
The share continues to display early signs of a bullish divergence. The share remains below its 200-day simple moving average, indicating a counter-trend trade possibility.
Our profit target is R29, with a trailing stop-loss at R23.80. Exit the trade around 4 September 2023. |
The price is noteworthy based on the RRG analysis, particularly due to its ability to stay above the 200-day simple moving average. Upside price momentum supports the idea.
Our profit target is R121, with a trailing stop-loss at R99. Exit the trade around 7 August 2023. |
May be entering stage 3 of an Elliot Wave pattern. The stock remains just above its 200-day simple moving average. Upside momentum supports the bullish bias.
Our profit target is R190, with a trailing stop-loss at R113. Exit the trade around 6 November 2023. |
