Prosus’s big e-commerce bet is showing promise

Prosus said its e-commerce business grew revenues and shrank trading losses for the year that ended 31 March, even as its overall profit continued to be dominated by its investment in Chinese technology giant Tencent.

Prosus and its parent, Naspers, have repeatedly battled questions from shareholders and analysts on the effect of Tencent, owner of China’s biggest messaging service WeChat, with some saying the company’s other businesses were too small to make any substantial difference.

On Monday, the company said revenue at the e-commerce portfolio — which excludes Tencent — grew 46% to US$6.2-billion for the year, and its trading loss narrowed to $429-million.

“We see … a massive acceleration, and we think it will continue to grow significantly,” said Prosus and Naspers CEO Bob van Dijk.

The e-commerce segment encompasses businesses across the globe in food delivery, online marketplaces, payments, and educational software.

“It is positive to see the strong revenue growth in the Prosus e-commerce portfolio, which should help these businesses to reach scale over time,” said Renier de Bruyn, senior equity research analyst at Sanlam Private Wealth, though he noted they remain loss making.

$39-billion value

Prosus and Naspers chief financial officer, Basil Sgourdos, said that the value of the e-commerce business was at $39-billion, or 17% of the total value of the company.

Prosus as a whole reported a better than expected net profit of $7.45-billion for 2021 on Monday, driven by strong returns from Tencent, which grew profit by 33%.

Analysts had seen Prosus net profit at $4.63-billion for the 12 months ended 31 March, up from $3.66-billion in the same period a year earlier, according to Refinitiv data. Prosus owns 28.9% of Tencent and is itself controlled by Naspers.

The companies are seeking shareholder support to move to a cross-holding structure that would shift the bulk of their assets to Amsterdam while leaving Naspers in control.

Prosus shares were up 0.75% on the Euronext and Naspers shares 0.22% higher against the broader local index which was which was down 0.42% at 11.45am. — Reported by Toby Sterling and Promit Mukherjee, (c) 2021 Reuters

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