The listing of publishing group Naspers forespells the growth of a major publishing group, writes Jacques Magliolo
KEEN interest shown by banks and major insurance companies in the shares of newspaper and magazine publisher Nasionale Pers Limited during its listing this week came as a complete surprise to numerous industrial analysts.
It signalled to the market that the company could come to present serious direct competition for the two major English-speaking press groups, Argus Newspapers and Times Media Limited.
Active trade pushed the share price to 2 100 cents from an initial price of 1 900 cents and the volume of deals during the day highlighted the importance institutions attach to Naspers. Nearly seven million shares changed hands in 198 deals, amounting to an average of R670 000 a deal or a total market value of R133-million.
And numerous dealers believe the share, which is controlled through Sanlam via Servgro’s 22 percent stake in Naspers, can rise further, possibly reaching a rating similar to TML’s. Barry Miller, a dealer for stockbroker EW Balderson, says: “If the company was rated the same as TML it could reach a level of 3 000 cents.”
If shareholder structures and types of investors form a part of any analysts’ investigation, why did Naspers exceed their expectations? Institutional analysts and portfolio managers believe that JSE-based analysts appear not to know how large the company really is. If the August 1994 JSE Handbook is used to rank companies on a market capitalisation basis (share price multiplied by shares in issue) Naspers would be ranked 86th, above Argus’ 106th place and TML’s 171.
Cape Town-based institution Foord & Meintjes’ industrial analyst Keith Bright says: “Some analysts were caught a bit off guard as they probably didn’t quite understand how diversified Naspers really is.”
He believes there is a misconception in the market that the company is a publisher only of Afrikaans newspapers, like Die Burger and Beeld. Naspers owns a variety of other newspapers, magazines, publishing operations, printing and technological facilities. These include newspaper Die Volskblad, the Sunday Afrikaans newspaper Rapport and City Press, a weekly newspaper for black readers.
On the magazine front, the company publishes Huisgenoot, Landbouweekblad, Sarie, Finansies & Tegniek, Insig, You, Fair Lady, Woman’s Value, Drum, and True Love & Family.
It is thought that one reason for Naspers’ listing is to obtain funds to move into the English newspaper market. Naspers already owns 25 percent of Perskor, which owns the Citizen. The Weekly Mail & Guardian understands that Nas- pers was part of a consortium that made a bid for the Cape Times.
However, interest of the banks and all-powerful insurers, the “institutions”, is focused on two things:
* Firstly, Naspers’ big share of the lucrative textbook market is under threat. While the company does not provide a divisional breakdown of turnover and profits, it is estimated that this market is the second largest contributor to profits, amounting to 20 percent of total turnover and profits. The largest is the media division (newspapers and magazines), which totals about 60 percent.
Analysts believe Naspers could lose its government contracts to print millions of textbooks (through group- owned publishers Nascou, Tafelberg, Human & Rousseau, Via Afrika, Van Schaik and Jonathan Ball) to ANC-linked publishers.
* Secondly, Naspers’ 35,4 percent stake in M-Net is expected to boost the company’s earnings. Analysts estimate that M-Net contributes only one percent to Naspers’ total turnover and bottom-line growth.