Tag: Naspers

By Wesley Diphoko for IOL

The Chinese government is flexing its muscle against consumer technology companies and South Africans are affected. It started with just Ant Financial, Jack Ma’s company, and now almost all Chinese consumer technology companies are under the scrutiny of the Chinese government including Tencent, a company which is partly owned by South African founded technology giant, Naspers. It is the Naspers exposure to Tencent that should worry South Africans, here’s why.

Tencent shares have plummeted by over 16% since the Chinese government ordered the company to cease all exclusive music streaming rights and licensing deals with record labels globally. On 24 July 2021) the Chinese technology giant was also fined 500,000 yuan (US$77 000) by authorities, following an official investigation that found that the company has engaged in monopolistic practices that gave it an unfair advantage over its competitors.

Initially, it was Jack Ma led companies that were receiving attention and now there’s more. The Chinese government has also been going after other fintech companies, including those owned by Didi (China’s Uber). As Didi prepared to IPO in the U.S., Chinese regulators announced they were reviewing the company on “national security grounds”, and are now levying various penalties against it. The government has also embarked on an “antitrust” push, fining Baidu — another top Chinese internet company — for various past deals. Leaders of top tech companies (also including ByteDance, the company that owns TikTok) were summoned before regulators and presumably berated. Various Chinese tech companies are now undergoing “rectification”.

As a result of these developments in China, Naspers & Prosus (Naspers sister company) fell sharply in Amsterdam and Johannesburg trading after China’s move to place restrictions on the country’s education-technology sector caused a plunge in shares in online giant Tencent. Earlier this week, Prosus was down 8.5%, while Naspers plunged 8.4%.

The current situation with Naspers should be a matter of concern for South Africans as the Public Investment Corporation is heavily invested in this company.

It’s also important to note that this happens at a time when other tech companies are performing well. Negative developments around Naspers will ultimately impact on South African pensioners who are investors via the PIC.

This should be a matter of concern as changes in China seem to be significant and may last for a foreseeable future. It seems China’s leaders want to prevent the emergence of alternative centres of power. The value of Ma’s business empire has collapsed. China’s attack on its tech companies seems far more comprehensive — it’s not just attacking the biggest internet companies, it’s attacking the entire sector (consumer tech). At the same time China is not attacking companies with the focus on hardware (e.g Huawei) but more on the companies in the consumer and software side of tech, areas that Naspers has invested heavily in.

It’s important that developments in China are understood for what they truly are. The ground seems to be shifting. China is now focusing on the most important part of technology and less on fun stuff in consumer tech.

Takealot is now half the size of Game

Source: Business Insider SA

Naspers on Monday announced a 65% surge in revenues at Takealot, in full-year results up to the end of March, to $606-million.

That makes for the equivalent of around R8.30-billion, or a monthly average not far below R700-million, for the unit, which includes the Mr D Food delivery business, fashion retailer Superbalist, as well as everything-store Takealot.com.

Mr D Food’s order volumes were up 117%, which saw its revenues more than double, said Naspers. In rand terms, Superbalist’s gross sales were up 45%.

On Takealot, third-party sales conducted via its platform grew faster than its own direct sales, said Naspers, after it added new sellers and new product categories.

In its most recent results, for the 52 weeks to the end of December, Massmart-owned Game recorded sales of R16.7 billion – down 15.5% from the year before. On a comparable-stores bases, its sales were down 13.2%.

Game suffered from trading restrictions on some categories of goods during hard lockdowns, but also said it has seen the impact of reduced foot traffic in malls, and shorter trading hours, plus trouble with stock due to both its own system issues and struggling vendors.

Its online sales were up 77.5% – but from a relatively small base.

Game, however, made money, reporting in its last full year a 21.7% increase in trading profit to slightly over R1 billion. Meanwhile Takealot unit’s “losses decreased to near breakeven”, said Naspers on Monday.

Takealot’s full year loss was $7 million, according to a Naspers investor presentation, the equivalent of a little under R100 million.

 

Naspers to invest R1.4bn in SA tech start-ups

Source: BizNews

Naspers Limited, the multinational Internet group which is known for its principal operations in Internet communication, entertainment, gaming and e-commerce, held its 106th annual general meeting last week.

Naspers Limited, the multinational Internet group which is known for its principal operations in Internet communication, entertainment, gaming and e-commerce, held its 106th annual general meeting

Following the Prosus listing, Naspers is still the largest South African company on the JSE.
We are one of the foremost investors in the South African technology sector, with the country’s leading etailer and its leading print and digital media business.
Through Naspers Foundry we aim to invest R1.4bn in the next generation of outstanding South African tech start-ups in the coming years. And Naspers Labs is pioneering an innovative hyper-local programme to tackle youth unemployment.

We also continue to contribute significantly in terms of tax: in total, Naspers group paid R13.2bn in taxes in South Africa during the year. In April 2020 we donated R1.5bn in emergency aid to the government’s response to the Covid-19 crisis.

This comprised R500m to the Solidarity Response Fund announced by President Cyril Ramaphosa, and R1bn of personal protective equipment and other medical supplies, which we sourced in China, in partnership with the Chinese government and Tencent, to support South Africa’s health workers.

This included the logistics to fly the equipment to South Africa and, in conjunction with the South African government, the distribution to medical facilities across the country.

Big growth for Takealot and Mr D Food

By Jamie McKane for MyBroadband

Naspers has released its financial results for the year ended 31 March 2020, showing impressive revenue growth for Takealot and Mr D Food.

“Takealot, South Africa’s number 1 etailer, extended its leadership and grew Gross Merchandise Volume (GMV) 46% year on year in local currency,” Naspers said.

“Takealot’s trading loss reduced by 20% in local currency and would have improved more, but for investment in the promising food delivery business.”

Naspers said this growth was driven partly by improving gross margins and disciplined management of operating costs.

Takealot recorded revenue growth of 28% in local currency, one of the main drivers of which was the marketplace business, which grew GMV by 77% year-over-year.

“Mr D Food, South Africa’s leading food-delivery service, continues to scale as it expands the local market for food delivery,” Naspers said.

Naspers also noted that Takealot was allowed to sell and deliver only essential items in the first phase of the COVID-19 lockdown, and Mr D Food was unable to operate while takeaway restaurants were closed.

Surge in demand
The reopening of e-commerce under the national lockdown has resulted in a surge in demand for online shopping.

This, in turn, has led to Takealot and other online retailers being flooded with orders which has resulted in significant shipping delays for many products.

A source close to Takealot told MyBroadband the company is now generating close to R1 billion in sales per month – around double their usual volumes.

Takealot did not confirm these numbers when it was asked for comment, but other e-commerce players also told MyBroadband their sales have more than doubled in recent weeks.

Many other online shops have increased their expected delivery times by over a week to address logistics bottlenecks.

By Jackie Cameron for BizNews

Chinese stock market darling Tencent has been a significant force behind the Naspers share price. The Tencent holding was moved to Prosus, which became Europe’s biggest listed consumer internet firm when it floated on the Amsterdam stock exchange at a valuation of more than €100bn in September. Prosus is controlled by Naspers. Prosus recently cautioned that not all of its operations had coped well with Covid-19. Tencent, however, has benefited from an uptake in gaming as people have self-isolated in lockdowns. BizNews Premium partner the Wall Street Journal reported that Tencent Holdings’ first-quarter profit was fuelled by strong demand for mobile games as homebound Chinese consumers turned to online entertainment during the coronavirus pandemic. Tencent, the world’s biggest video game company by revenue, said its January-March net profit grew 6% to 28.9 billion yuan ($4.08bn) from the same period last year. Revenue rose 26% to 108.1 billion yuan. Both beat analyst estimates, according to FactSet.

Tencent experiences $305bn rebound

Tencent surged toward a record Tuesday after a $305bn rally since its 2018 low.

The stock rose as much as 5.1% Tuesday, putting Tencent on pace for its highest-ever close. Shares, poised to have their best month since January 2012, have surged nearly 50% from March’s bottom to send Tencent’s market value above HK$4.7trn ($606bn).

After doubling in 2017, shares were almost halved at one point the following year as gaming approvals dried up and a slowing economy in China cooled advertising demand. But gaming has been a strong point in 2020 for Tencent in the wake of Covid-19 lockdowns. Analysts’ average stock target has risen 13% the past six weeks while Chinese investors have been holding a record amount of the company’s equity, according to data compiled by Bloomberg.

By Jeanny Yu for Bloomberg, Fin24 

China’s biggest online platform Tencent’s accelerating sell-off could get a lot worse if the stock fails to hold above its key support level.

There’s a risk that will happen Thursday: Asia’s biggest stock was down 0.6% in Hong Kong as of 1:03 p.m. local time, despite an otherwise upbeat stock market.

Tencent is now trading below the key level of HK$320 that supported its shares on three occasions this year. The stock has lost about 20% since a peak in April, equivalent to some $93 billion in market value.

Naspers, which via its new digital company Prosus owns a 31% stake in Tencent, is also feeling the pain. Both shares fell by more than 5% yesterday, losing R145 billion of their combined market value in a single day.

While the Tencent shares have been stuck in a downtrend for months, selling was particularly aggressive Wednesday despite no apparent trigger.

Theories circulating round some trading floors included souring sentiment from investors in China, as well as concern that Tencent’s decision to air National Basketball Association games may backfire.

Adding to jitters this week was a local media report that China is considering revising a law to control young people’s online gaming activities – a business that remains one of Tencent’s most profitable.

The Internet giant will report third quarter earnings on November 13.

Prosus, which is currently trading at around R1,020, has now lost almost 18% of its value since its listing in Amsterdam and on the JSE mid-September.

By Tom Head for The South African

Naspers, the holding group of Africa’s biggest pay-TV organisation MultiChoice, have decided to list the business on the Johannesburg Stock Exchange. The move comes as traditional media outlets consider ways to stem the momentum of streaming services like Netflix and Hulu.

The shares will go live on the JSE on 27 February 2019. Investors will be able put their money into MultiChoice if they believe it’s a sound financial investment; something that CEO Calvo Mawela firmly believes is already true:

“With strong financials, the flexibility of an ungeared balance sheet and deep local knowledge, we hope to deliver excellent returns to shareholders over time.”

MultiChoice to receive boost in its battle with Netflix et al
But how will this make it more competitive with the likes of Netflix? Well, put quite simply, opening up a more diverse range of investment will eventually improve the worth of MultiChoice. Naspers are now narrowing a discount between its own market value and the value of its stake in Chinese tech giant Tencent, according to MoneyWeb.

By floating the shares on the JSE, an increase in net worth will allow MultiChoice to spend more money on quality programming and any potential streaming developments of their own in the future.

What is the MultiChoice share price estimated to be worth?
Meanwhile, South African Market Insights (SAMI) told us that this is perhaps the best time for Naspers to make this move. While subscriber numbers are up, their total revenue growth has limped along at a slow pace. They also estimate that MultiChoice will be worth R211 a share when they go public.

“MultiChoice has seen strong subscriber numbers grow over the last three years – up by 29.4% – while revenue over the same period only grew by 1.4%. Their trading profit margins are in decline too.”

“But looking at the number of shares MultiChoice plans on issuing, it will give the company a valuation of R94.8 billion, which will make MultiChoice the 21st largest firm listed on the JSE at around R211 a share.”

What happens next?
MC have approximately 13 million subscribers in Mzansi. No company is too big to fail, but SAMI have warned that there will be a “feeding frenzy” when the shares are first made public, as investors scramble to get a slice of the pie at the earliest opportunity. We will only get a true reading of its popularity a few months after it has listed.

Naspers to unbundle and list MultiChoice

By Nick Hedley for Business Day

The transformation of Naspers, which was founded more than a century ago to produce Dutch-language newspaper De Burger, into an online-only behemoth is almost complete.

Africa’s most valuable company, which owns a 31% interest in Chinese internet giant Tencent, said on Monday it planned to unbundle its pay-TV business MultiChoice onto the JSE.

Naspers will hand its interest in the DStv operator to its shareholders.

Investors cheered the news. After falling 3.2% earlier in the day, in line with Tencent’s decline in Hong Kong, Naspers rallied to close 0.7% up at R3,206.42, valuing the company at R1.4-trillion.

Naspers hopes to list the new entity MultiChoice Group, which includes its local and rest-of-Africa pay-TV business along with Showmax Africa and security company Irdeto, in the first half of 2019. The unbundling will cap off a remarkable transformation at Naspers, which was mostly a publishing and pay-TV business until its 2001 investment in China’s Tencent.

Naspers would not raise funds through the deal, said CEO Bob van Dijk, but its shareholders would benefit as the market currently ignored MultiChoice when valuing the group.

In its sum-of-the-parts valuation, US bank JP Morgan calculated that Naspers’ majority-owned MultiChoice unit is worth $8bn. More than 90% of that value sits in SA, according to the bank. That implies that MultiChoice Group is worth more than Shoprite.

Van Dijk said Naspers plans to give MultiChoice SA’s BEE investors another 5% stake in the local pay-TV business. “Besides unlocking value for our shareholders, maybe more important we think it will also unlock value for [BEE scheme] Phuthuma Nathi, which is already one of the most successful broad-based BEE schemes.”

He said Naspers will continue to invest in its SA e-commerce businesses, which include Takealot, Mr D Food, PayU and AutoTrader. “In the last year, we invested more than R3bn in the e-commerce businesses in SA alone. We expect to continue to invest and we’re looking at interesting prospects.”

It will also retain its interest in Media24, which is moving quickly into online publishing. The pay-TV market was poised for further growth despite pressure from internet-based rivals such as Netflix.

“Even in markets like Europe, people still have traditional TV services and on top of that people have connected services. In Africa the story is even more positive — you see very significant growth in traditional TV … as well as decent take-up already in SA of [streaming services] DStv Now and Showmax. I’m confident it’s a growth story.

“I feel confident about putting the business on its own legs.”

Robert Pietropaolo, a trader at Unum Capital, said the unbundling would be positive for Naspers “but the pressure will certainly be on MultiChoice to stay competitive”.

“MultiChoice themselves have already started cutting their headcount and they have started offering lower-tier packages, which unfortunately does not bring in the desired revenues. MultiChoice will not only have to be nimble from now on, but I think they may have to re-invent themselves to be competitive,” Pietropaolo said.

In the year ended March, the pay-TV operator lost 41,000 premium subscribers across its African markets. Even though the total subscriber base grew — MultiChoice added 563,000 users in SA in the year to March — this growth came from far less profitable lower-cost packages. However, the company remains highly cash generative. Over the same period, MultiChoice generated revenues of R47.1bn and trading profits of R6.1 bn.

MultiChoice SA CEO Calvo Mawela said the company had slowed the decline in high-margin premium subscribers. It lost more than 100,000 of these customers in its 2017 financial year but reduced that number to about 40,000 in 2018.

“Our focus on Premium is beginning to bear fruit.… We’ll continue to focus on Premium to ensure that we do not see further decline in Premium subscribers going forward.”

Source: Fin24

Naspers has concluded the disposal of its 11.18% stake in Indian commerce company Flipkart, for $2.2bn (about R27.7bn), according to a notice issued to shareholders on Monday.

The e-commerce giant in May announced it was selling its stake in Flipkart to US-based retailer Walmart.

In the shareholder notice, the group said that the transaction was closed on August 18.

The proceeds of the sale will be used to reinforce the balance sheet and will be invested over time to support the growth of Naspers’ classifieds, online food delivery and fintech businesses as well as other growth opportunities, when they arise, the group said.

Naspers shares, which opened at R3 252 on Monday morning were up 4.1% to R3 310.47 by 12:19.

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