Naspers and Prosus share prices renew gains after trading update and listing news

Naspers trading update

Naspers has released a trading update for the 6 months ending 30 September 2021 in which the group has guided the following:

• Earnings per share (EPS) to have increased by between 503% and 510% in 1H22 (from 1H21)
• Headline earnings per share (HEPS) share to have declined by between 5% and 12% in 1H22 (from 1H21)
• Core HEPS to have increased by between 8% and 15% in 1H22 (from 1H21)

The surge in EPS reflect the group’s sale of a 2% share in Tencent Holdings.

The softer HEPS figure (0 to -7% expected) reflects group earnings excluding the sale of Tencent shares, with the possible contraction reflecting an increase in financing costs for the group.

The Core HEPS figure adjusts for non-operational items and is considered the most ‘appropriate’ measure of group performance by the board. As released by Naspers, Core HEPS were ‘driven by a larger contribution from Tencent’ and ‘partially offset by investments to grow ecommerce ecosystems and platforms’.

Prosus trading update

The Prosus trading update for the same period reads (obviously) very similar with the salient earnings figures as follows:

• Earnings per share (EPS) to have increased by between 439% and 446% in 1H22 (from 1H21)
• Headline earnings per share (HEPS) share to have changed by between 0% and -7% in 1H22 (from 1H21)
• Core HEPS to have increased by between 5% and 12% in 1H22 (from 1H21)

Prosus inclusion in the Dow Jones Sustainability Index (DJSI) Europe

Prosus will now be included in the DJSI index in Europe. The index inclusion recognizes the company as a business leader in sustainability categories which include Board Diversity, Brand and Sustainability Strategy, Risk Culture, Environmental Reporting Assurance and Climate-related Management Incentives (to name but a few).

News of the Prosus inclusion in the DJSI is a further welcome sign to investors as it recognises the business with regard to its environmental, social and economic outlook and achievements. A inclusion into a new index is accompanied with basket buying from funds referencing the benchmark. This is providing some support to the Prosus and Naspers share prices at present.

Naspers & Prosus – Technical Analysis

Naspers

The share price of Naspers has broken out of a short to medium term consolidation. The upside break of the 2710 level provides further merit to the suggestion by the moving averages on the chart (20DMA and 50DMA) that the short to medium term trend is reversing from down to up.

The break above 2710 now targets 3010 as the next level of resistance. Traders who are long might consider trailing a stop on a close below the black trend line on the chart above.

Prosus

The share price action of Prosus mimics that of Naspers in that it has broken out of a short to medium term consolidation, with the moving averages crossing to suggest a short to medium term trend reversal from down to up. The price levels however do differentiate.

The break above 1370 now targets 1470 as the next level of resistance. A break of this level would further target the next level of resistance considered at the 1585 level. Traders who are long might consider trailing a stop on a close below the black trend line on the chart above.

In summary:

• Naspers EPS for the interim period is expected to have increased by more than 500%

• Prosus EPS for the interim period is expected to have increased by more than 400%

• The EPS figure for Naspers and Prosus was boosted by the sale of the group’s Tencent share holding

• Excluding the Tencent sale EPS for Naspers and Prosus are expected to have declined in 1H22 by between 7% and 12% and 0% to 7% respectively

• Prosus has been included in the DJSI Europe Index

• In the short to medium term we are seeing bullish breakouts and trend reversals on Prosus and Naspers.