The poster child of the South African stock market over the last several years has undoubtedly been Naspers, with its largest holding in Tencent.
I’ve tried to come to grips with the company and its individual parts which will take a bit more time, however, several things become apparent in the information at hand.
Naspers has been able to grow its revenue at a phenomenal rate for more than a decade. Its revenue peaked in in 2016 with a fall of over 50% in its 2017 reported revenue. Since then, its continued to grow its revenue and earnings per share.
Its average free cash flow margin over the last 5 reported years ending 2020, is around -2.71%. Its average EBITDA over the last 5 reported years ending 2020, is also negative at around -6.51%.
This typically isn’t an issue if the company continues to grow its revenue as it has in the past whilst investing in new and exciting ventures.
Its debt to revenue has steadily been increasing and now sits at over 100%.
There are a few concerns that I have regarding the “health” of the company’s financials, however, it needs to be taken into perspective with the future growth strategy of the company.
Based on the chart it appears that a wedge pattern has formed above the long-term channel. Maybe this suggests a possible breakout within the next 2-3 weeks?
Please note, this idea is shared for educational and discussion purposes only and should not result in speculative investment decisions in any asset class.
I’ve tried to come to grips with the company and its individual parts which will take a bit more time, however, several things become apparent in the information at hand.
Naspers has been able to grow its revenue at a phenomenal rate for more than a decade. Its revenue peaked in in 2016 with a fall of over 50% in its 2017 reported revenue. Since then, its continued to grow its revenue and earnings per share.
Its average free cash flow margin over the last 5 reported years ending 2020, is around -2.71%. Its average EBITDA over the last 5 reported years ending 2020, is also negative at around -6.51%.
This typically isn’t an issue if the company continues to grow its revenue as it has in the past whilst investing in new and exciting ventures.
Its debt to revenue has steadily been increasing and now sits at over 100%.
There are a few concerns that I have regarding the “health” of the company’s financials, however, it needs to be taken into perspective with the future growth strategy of the company.
Based on the chart it appears that a wedge pattern has formed above the long-term channel. Maybe this suggests a possible breakout within the next 2-3 weeks?
Please note, this idea is shared for educational and discussion purposes only and should not result in speculative investment decisions in any asset class.