Johannesburg - South
African media and e-commerce firm Naspers [JSE:NPN] reported a 7% gain in first-half
profit on Tuesday, capped by higher development costs as its spends more to
bulk up its widespread operations.
Cape Town-based Naspers has transformed itself from an
apartheid-era newspaper publisher to a global multimedia business by buying or
taking stakes in emerging-market internet companies.
The company warned in June that profit this year would
likely be lower, as its spend more on developing the Internet platforms it owns
in Eastern Europe, Brazil, Asia and Africa.
“We saw a nice revenue dynamic in the core internet segment
- that’s internet assets they’ve bought themselves,” said Ziyad Joosub, an
analyst at JP Morgan.
“The only problem is that there has been increased
development spend and it hasn’t been associated with any improvement in
profitability.”
Shares of Naspers slid more than 2% in Johannesburg trade
following the results, making it one of the biggest percent decliners among the
benchmark Top 40 - (Tradeable) [JSE:J200] index.
Naspers’ most successful bet so far has been its over 30%
stake in Tencent Holdings, China’s second-biggest Internet firm by value, which
has posted years of explosive growth in the billion-strong consumer market.
But Tencent’s growth has begun to slow, making investors
nervous about Naspers prospects. Naspers shares are down 15% since June.
“If sentiment around Tencent can change, then Naspers could
see quite a meaningful re-rating over the next six to 12 months... Investor
sentiment around Tencent remains so weak in Hong Kong,” said JP Morgan’s
Joosub.
Tencent this month reported its slowest profit growth in
four years, missing analysts’ estimates on softer growth in some of its games
and lower margins.
Founded in 1915 as “Die Nasionale Pers”, or The National
Press, Naspers has a market value of $17bn, making it bigger than Britain's
Pearson, the $14bn owner of the Financial Times and Penguin Books.
Naspers said core headline earnings per share rose to 921
cents in the six months to end-September from 860 cents a year earlier.
The company considers core headline earnings, which exclude
one-time items, to be the most accurate measure of its earnings.
Naspers said this month it expected earnings to rise by 5%
to 15%.
Revenue totalled R18.5bn compared with R15.8bn a year
earlier.
*Fin24 is a Naspers publication.