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Naspers: Ceiling after ceiling


In the old economy, back in the days when dark satanic mills made actual stuff, business was reasonably predictable. You’d sweat your workers a little harder, squeeze the costs, grab a little more market share and you’d be looking to bump your bottom line up by 10% or 20%/year until you retired with the gold watch to the furthest corner of the golf club bar.

In the brave new world that Naspers has embraced, however, all bets are off and there is practically no limit to the company’s ambition. The conservative end of the punterocracy has been raising eyebrows about Naspers for years, muttering that it’s too expensive, too frothy, too risky, that they don’t understand the business model and don’t like China, and so forth, as the share price has flicked them a disinterested finger and gone through ceiling after ceiling. It’s been an astonishing ride, and the company still has plenty of appetite left to keep the journey going.

Tencent remains the jewel, growing strongly across its social network, online games, advertising and payment platforms, with total revenues up a cheeky 48% year on year. Naspers can invest heavily in areas with promise, and consolidated development spend for the year rose by 38% to $387m, concentrating on areas such as letgo in the US and its Indian travel business.

The company has an extraordinary breadth both geographically and in business sectors.

Naspers Ventures has been tasked with finding pockets of long-term growth that will write the next chapter of this remarkable story.

Visual International: Battle for survival


Moving swiftly from the blue-whale section to the minnows, we find the somewhat peculiarly named Visual International Holdings. There may be a case to be made for the word Visual, in that the company builds homes you can see, but it’s a little harder to visualise what’s international about the developer of a lifestyle estate in Stellendale.

Perhaps it is looking forward to a brighter future where its estates will be sprouting like mushrooms all over the globe, but for the moment the battle is for survival.

Residential property development is a sector that should have plenty of fundamentals going for it, but Visual’s experience shows that it is far from easy to turn demand into a solid bottom line. The company has struggled ever since it listed, when it managed to raise only a third of the capital it was looking for. This put severe constraints on its cash flow and its ability to implement its business plan, and it’s been on the back foot ever since.

Going concern remains a distinct issue, but the company has flogged a couple of chunks of land to shore up its balance sheet, eliminating its more expensive debt and paying off creditors, who must have been mightily relieved to see some loot coming their way.

Now the focus must be on bringing its development projects to fruition and building the confidence and the momentum that will be required to make it a success. Visual is certainly not out of the woods yet, but it’s looking a lot healthier than it did a few months ago.