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 efficiencies.

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 earlier.

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 NV.

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 messaging app.


--Jaime Llinares Taboada contributed to this article


Write to Alexandra Wexler at


(END) Dow Jones Newswires

November 23, 2020 04:50 ET (09:50 GMT)

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