Naspers Ltd chief executive officer Bob van Dijk said five years of heavy e-commerce investments are bearing fruit, which should prove to investors that the assets are worth more than they think.
Van Dijk is seeking to show shareholders that Africa’s largest company by market value has more to offer than just its well-timed investment in Chinese Internet giant Tencent Holdings Ltd (騰訊).
Cape Town-based Naspers has ridden the coattails of the WeChat (微信) creator to be the best performer on Johannesburg’s FTSE/JSE Africa Top 40 Index this year with a 50 percent rise.
The catch is that the market values the 33 percent stake in the Shenzhen-based company at almost US$32 billion more than Naspers as a whole.
Outflows of South African capital since late 2015 have contributed to the widening disparity, Van Dijk said.
The value gap will start to close as Naspers’ classified-advertising division, which includes Russia’s Avito, turns profitable in the current fiscal year, he said.
The services unit of payment business PayU is close to breaking even, and Polish e-commerce platform eMAG is starting to benefit from a large customer base.
The companies are part of Naspers’ e-commerce unit, which recorded a loss of US$682 million for the 12 months that ended in March, leaving out interest, tax, depreciation and amortization.
“We are excited about a business like eMAG turning profitable,” Van Dijk said in an interview on Friday. “That will be a catalyst to recognizing the value of our other assets.”
Van Dijk’s main priority in the short term will be on expanding Naspers’ companies to reach broader audiences and using technology to improve customers’ experience.
“We have a big team that looks at using artificial intelligence in our classified platforms to eliminate spam ads, for instance,” he said.
Earlier at the company’s annual meeting in Cape Town, chairman Koos Bekker countered criticism that Naspers relies too heavily on its US$132 billion stake in Tencent.
He reminded investors that they would have been a lot poorer if he had given in to similar pressure to sell the holding years ago.
Tencent shares have risen more than sixfold in the past five years, closing on Friday at HK$328.40, as the company’s services have become an integral part of Chinese life.
“Five years ago there was also a lot of unhappiness,” Bekker told shareholders. “If we had sold then, you would have gotten HK$45, now you get HK$325. We are not married to the share, but at this point in time it’s paying shareholders.”
Bekker said that the assumption that Tencent is making money and Naspers’ other ventures are loss-making was “illiterate,” since profitability does not accurately capture the value of the businesses.
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