Naspers Earnings Rise as Classifieds Unit Turns First Profit

(Bloomberg) -- Naspers Ltd. first-half earnings climbed 39 percent as Africa’s largest company by market value made further progress in turning a profit at its myriad of internet businesses.

  • Core headline earnings were $1.7 billion. The classifieds business is now profitable, even when including Letgo -- which dragged that division down in the 2018 fiscal year. The online-retail unit narrowed losses.

Key Insights

  • Turning classifieds profitable could help Naspers stop being defined by its blockbuster early investment in Chinese internet giant Tencent Holdings Ltd. The Cape Town-based company’s earnings are also based on the performance of several other online firms -- from Brazil to Russia and India.
  • Naspers is working on closing an almost $28 billion valuation gap between its market value and that of the 31 percent stake it owns in Tencent. To help achieve that, it’s spinning off its pay-TV company in 2019 and may consider similar moves for other businesses.
  • Despite the valuation discrepancy, there is value in Naspers’s other internet ventures, according to analysts at Barclays Plc. The classifieds companies are worth $10 billion, the food delivery businesses $3.5 billion and the online-payments firms $3 billion, they said in a note earlier this month.

Market Reaction

  • Naspers shares have slumped 18 percent this year, tracking a 23 percent fall at Tencent. The stock traded 0.5 percent higher at 2,834.60 rand as of 3:27 p.m. in Johannesburg.
Naspers Earnings Rise as Classifieds Unit Turns First Profit

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  • Read more about the earnings here.
  • Core headline earnings per share were $3.85, below an average estimate of $3.98. That was based on three analysts polled by Bloomberg.
  • “we will maintain our focus on driving profitability in the e-commerce units,” the company said. “Our strong balance sheet provides a basis for driving growth across the portfolio and unlocking new opportunities that fit our criteria.”

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