Prosus 1st Half Net Profit Jumps Amid Ecommerce Strength, Tencent Holdings Performance
By Alexandra Wexler
JOHANNESBURG--Internet conglomerate Prosus NV reported a 21%
jump in first-half net profit on Monday, thanks to growing revenue
in its ecommerce businesses and a strong performance from Chinese
internet and gaming colossus Tencent Holdings Ltd., in which it
holds a 31% stake.
Amsterdam-listed Prosus said net profit was $3.02 billion for
the six months ended Sept. 30, compared to $2.5 billion a year
earlier. Prosus is a 72.7%-owned subsidiary of Naspers Ltd., a
South African newspaper-publisher-turned-technology-giant and
Africa's most valuable listed company.
Prosus, which holds Naspers' international assets, attributed
the better performance to increased revenue from its ecommerce
businesses, which include U.S. online marketplace Letgo, German
food-delivery business Delivery Hero and BYJU's, an
educational-technology company in India. In addition, Tencent
reported an 89% jump in net profit for its third quarter earlier
this month, thanks to strong gaming revenue and better cost
Parent Naspers, meanwhile, reported a drop in earnings for the
six months ended Sept. 30, as the flotation of Prosus last year
resulted in a smaller contribution to the group. Naspers recorded a
profit of $2.14 billion for the first half of its 2021 fiscal year,
down 5.2% from the same period a year earlier--in line with
guidance provided last week. The company said it recognized 72.7%
of Prosus's earnings in the period, compared with 100% a year
Revenue at Prosus for the first half of fiscal 2021 jumped 53%
to $2.17 billion, while Naspers' revenue increased 44% to $2.5
billion over the same period, the company said.
"We believe our businesses today are fundamentally stronger than
when we went into the pandemic," Basil Sgourdos, chief financial
officer at both Naspers and Prosus, said on a media call.
Last month, Prosus said it planned to buy back up to $5 billion
of its own shares and those of parent Naspers, the latest attempt
to narrow a persistent gap between the company's market value and
that of its stake in Tencent. Naspers said the buyback plan was a
vote of confidence in its assets and would help its investors
capitalize on the discount.
Analysts have attributed this persistent gulf to a
dividend-withholding tax that Naspers would need to pay should it
sell its stake in Tencent and distribute the proceeds to investors,
as well as the fact that holding companies generally trade at a
discount. Tech and internet stocks have also been on a tear this
year, because of pandemic-fueled demand, further boosting the share
prices of companies like Tencent.
"We are investing in very exciting assets that are doing
exceptionally well," Naspers and Prosus Chief Executive Bob van
Dijk said. "We believe that over time that's the most important
component to us narrowing the discount."
Prosus has recently lost out on two high-profile acquisitions.
In July, it lost a bidding war for eBay Inc.'s classified-ads
business to Norway's Adevinta AS. Earlier this year, U.K. food
delivery business Just Eat PLC snubbed a 4.9 billion pounds ($6.35
billion) offer from Prosus and instead merged with Dutch rival
Prosus shares in Amsterdam were trading 1.9% higher at 92.72
euros ($110.04) on Monday morning. Naspers shares in Johannesburg
were up 2.6% at 3,201.99 South African rand ($209.04).
Founded in South Africa in 1915, Naspers was originally De
Nationale Pers Beperkt, or the National Press Ltd., which produced
a Dutch-language newspaper for the country's Afrikaner population.
In the 1980s, the company began expanding beyond its publishing
roots, including into video entertainment.
Naspers paid $34 million for its original Tencent stake in 2001,
and Tencent is now one of the world's most valuable companies. Much
of Naspers' growth in recent years can be attributed to the rise in
value of its stake in Tencent, best known in China for its WeChat
--Jaime Llinares Taboada contributed to this article
Write to Alexandra Wexler at firstname.lastname@example.org
(END) Dow Jones Newswires
November 23, 2020 04:50 ET (09:50 GMT)
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