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South Africa’s Naspers banks on e-commerce boom post pandemic for growth

South African media and internet company Naspers Ltd said on Monday it would look to e-commerce for growth after its food delivery and online sales soared during a nationwide lockdown to curb the coronavirus.

Africa’s biggest company by market capitalisation benefited during the lockdown as more people shifted online for shopping, food, making payments or learning.

Its revenues from e-commerce business grew 37% in the six months through Sept. 30 to US$2.9B, it said, led by 99% growth in food delivery and 73% growth in online retail.

“Because of COVID the future came closer,” Chief Executive Bob van Dijk said during a call with reporters.

Naspers shares have risen 30% this year and were up 2.45% at 1015 GMT, outperforming the broader Johannesburg market index , which was up 1.1%.

Chief Financial Officer Basil Sgourdos said the company would invest more in new opportunities in e-commerce, but declined to give any targets.

Also read: Uber launches medicines delivery service in South Africa

Naspers’ core headline earnings per share (HEPS) for the six months ended Sept. 30 dropped 4.2% to 379 cents from a year earlier as Prosus contributed only 72.66% of its earnings to group earnings, down from 100% a year earlier, following its spin off.

Naspers spun off its international assets into Prosus NV in September 2019 and listed it on the Amsterdam Stock Exchange.

Naspers’ group revenue for the half year through Sept. 30 totalled $13 billion, up 27% from a year earlier.

Prosus, through investments in food delivery, classifieds and online retail and payments, saw revenue increase by 53% to US$2.17B in the first half and narrowed its operating loss to US$207M, from US$252M a year earlier.

“This is one of our fastest growth rates ever,” Sgourdos said.

Growth in Naspers’ e-commerce business will also help the company to reduce its reliance on Chinese internet giant Tencent Holdings Ltd.

Prosus holds a 31% stake in Tencent, which generates three quarters of total revenues of the Naspers group and almost all of its profits.

Naspers’ market capitalisation is currently at a 50% discount to the fair value of its underlying assets, Sgourdos said.

“We are aware of the discount,” said van Dijk, adding the e-commerce portfolio is the “most important component to narrow the discount.”

Sgourdos said narrowing the discount will happen “over multiple years.”

Source: Reuters

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