Naspers cashes in on online revenue streams

Naspers CEO Bob Van Dijk hits a gong at the start of trade for Prosus shares on the Amsterdam Stock Exchange. (Supplied)
Naspers CEO Bob Van Dijk hits a gong at the start of trade for Prosus shares on the Amsterdam Stock Exchange. (Supplied)

Naspers' [JSE:NPN] interim results show a streamlined group, with virtually all revenues now generated from online activities, the group said on Friday.

The group makes no bones about its aim to transition to a 100% consumer internet company.

Over the interim period until the end of September, revenues increased 20% to US$10.2bn; trading profit grew 9% to US$1.9bn; and core headline earnings grew 10% to US$1.7bn.

One of the group's significant strategic initiatives during the interim period was the listing in September this year of its international internet assets outside of South Africa on Euronext Amsterdam as Prosus N.V. The latter has a secondary listing on the JSE and is 73.84% owned by Naspers, with a free float of 26.16%.

Apart from its 31% stake in China's biggest online platform Tencent, Prosus owns shares in the global online selling platform OLX, Indian online food-delivery business Swiggy, Indian online travel site MakeMyTrip, the biggest online classifieds and property platform in Russia, Avito, and Russia's biggest internet company mail.ru. In South Africa, it owns AutoTrader and Property24.

Bob van Dijk, group chief executive, said the listing of Prosus positioned the group well for future growth, opening up investor access to its unique portfolio of international internet assets.

"For the six months ended 30 September, we delivered solid results and good progress in our core segments, which are growing fast and scaling well," said Van Dijk.

At the end of the interim period under review, the Prosus listing had already unlocked around US$10bn of value for shareholders by reducing the discount to the combined net asset value of Prosus and Naspers.

Prosus, which also announced its interim results on Friday, showed revenues increased 20% to US$9.9bn, trading profit growing 7% to US$1.9bn and core headline earnings growing 10% to US$1.7bn.

Another significant milestone during the interim period was the unbundling and listing on the JSE of Naspers' video entertainment business MultiChoice Group earlier this year. This unlocked over US$4bn of value for shareholders, according to Naspers.

Tencent

Over the interim period Tencent delivered a strong performance in areas such as payments. Its ecosystem continues to expand and drives strong user engagement. In the view of Naspers, Tencent is well positioned to continue to offer a number of new products and services for its users.

In ecommerce all key segments made good progress against financial and strategic objectives in the period, and Naspers believes each segment will continue to benefit from sectoral growth trends.

Basil Sgourdos, group chief financial officer, said the classifieds and payments & fintech segments reached profitability at their core and continue to grow strongly. The group continues to invest in this segment to drive future growth.

Sgourdos said food delivery remains the largest investment area for the group this year.

Further growth

In October, after the end of the interim period, Prosus announced the terms of a cash offer to acquire Just Eat. Under the terms of the offer, Just Eat shareholders will be entitled to receive 710 pence in cash for each Just Eat share. The closing date of the offer is December 11, 2019, unless extended by Prosus.

"We end the period with a strong net cash position of US$5.9bn, which positions us well to pursue further growth," Sgourdos concluded.

Overall ecommerce revenues increased 27% to US$2.1bn; core classifieds and payments and fintech segments were profitable; and the food delivery segment grew orders 110% and revenues by 69%.

Over the interim period Naspers invested in the payments and fintech space, namely US$66m in Wibmo in India and US$45m in Red Dot Payments in Asia. It invested US$56m cash and equity with Carousell in South-east Asia in the classifieds space.

Furthermore, Naspers continued to back future growth prospects with Ventures investments in Meesho (US$80m) and Brainly (US$25m). It also realised a gain of US$599m, following the exchange of its 42.53% interest in MakeMyTrip for a 5.6% effective interest in Ctrip.

Koos Bekker, Naspers chair, commented in a statement that, while growing revenues, trading profits and core headline earnings, Naspers took several steps to build a global business with long-term growth.

"In South Africa, the appointment of Phuthi Mahanyele-Dabengwa as CEO underlines the group’s continued commitment. Our Naspers Labs and Naspers Foundry aim to tackle youth unemployment and support the development of the local entrepreneurial ecosystem," said Bekker.

By late afternoon on Friday Naspers shares were trading up 1.08% at R2 230.85 per share.

* Fin24 is part of 24.com, which is in the Naspers-owned Media24 stable.

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