Africa's Biggest Company Sees Profit Soar on Tencent, E-Commerce

(Bloomberg) -- Naspers Ltd. expects to report an increase in earnings for its most recent financial year, bolstered by Chinese internet giant Tencent Holdings Ltd. and various e-commerce businesses.

Core headline earnings per share, which exclude one-time items, rose 70 percent to 75 percent in the year through March, Cape Town-based Naspers said in a statement Wednesday. The company didn’t provide details on the trading performance of individual units, which also include Africa’s biggest pay-TV provider, but will do so in a full earnings report on June 22.

Africa’s largest company by market value has long piggy-backed on fast-growing WeChat-creator Tencent, in which it owns a 31 percent stake. Meanwhile, Naspers is investing in other media and technology businesses around the world, with a particular focus on online retail such as food delivery.

The fiscal 2018 financials incorporate a change in accounting policy, which also required a restatement of core headline earnings in the previous year to produce comparable figures. Naspers didn’t historically include amortization of intangible assets in the calculation, but will now take account of the amortization of Tencent’s digital content costs, according to Meloy Horn, Naspers’s head of investor relations.

‘Strong Numbers’

“Those are pretty strong numbers given the valuation of Naspers,” said Michele Santangelo, a money manager at Independent Securities in Johannesburg.

The shares rose 1.2 percent to 3,393 rand at the close in Johannesburg, valuing the company at 1.5 trillion rand ($113 billion).

In March, Naspers raised HK$76.9 billion ($9.8 billion) by selling a 2 percent stake in Tencent, and plans to use the money to invest in classifieds, online food delivery and financial technology businesses. The company then netted a $1.6 billion profit from the sale of a stake in Indian e-commerce startup Flipkart in a deal with Wal-Mart Inc.

Naspers’s 31 percent stake in Tencent is worth more than the company as a whole, and Chief Executive Officer Bob Van Dijk has pledged to narrow the valuation gap.

©2018 Bloomberg L.P.