Naspers reported a 65% jump in first-half profit on Wednesday, boosted by internet businesses that include the largest stake in China’s Tencent Holdings and narrower losses from its e-commerce assets.
Naspers owns a third of the fast-growing Chinese company, which has overshadowed its other investments in both value and earnings, and has grown the revenue contribution of its internet division to 77%, from 72% a year ago.
The share price of Naspers, which also has stakes in Germany’s Delivery Hero and Russia’s Mail.ru , has doubled this year buoyed by Tencent’s sharp climb.
“It is clear that our internet operations are scaling very well,” chief executive Bob van Dijk told Reuters, pointing to the division’s revenue increasing 42% year on year to $6.9 billion.
This helped to lift headline earnings to $1.5 billion, or 350 cents per share in the half-year to the end of September, from $914 million, or 212 cents per share a year earlier.
The investment in Tencent has helped to transform Naspers from a small South African newspaper publisher into the continent’s most valuable company.
Naspers’ portfolio sprawls into 120 countries and includes cash-guzzling investments in e-commerce sites and online classifieds which some shareholders complain have weighed on the Cape Town-based group.
But the classifieds business, Van Dijk said, has turned profitable in the past six months once the effect of the recent investment in U.S. mobile business letgo is stripped out.
Its e-commerce businesses also grew revenue by 38% and, after adjusting for acquisitions and disposals, decreased trading losses by 17%, the company said in a statement.
Van Dijk sees the e-commerce businesses as a mix of assets at different levels of maturity – as a whole they are not profitable, mostly due to fresh investments in new ventures.
“If we do nothing new, I think in a few years we will be profitable in aggregate, but if we add new businesses that will look different,” he added.
And the stakes in letgo, a mobile rival to Craigslist, and India’s Flipkart, have huge potential returns as they represent significant exposure to the world’s two largest online retail markets, Van Dijk said.
Naspers shares were up 0.8% at R3 790 by the close, versus a 0.6% rise in the JSE’s benchmark Top 40 Index.
Headline earnings per share (EPS) is Naspers’ main profit measure that strips out non-operational and one-off items.