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Naspers/Prosus shares leap as it flags earnings bonanza from sale of Tencent stake

Prosus Naspers said the once-off gain for the sale of the 2 percent stake in Tencent in April 2021 was excluded from headline and core headline earnings per share.

Prosus Naspers said the once-off gain for the sale of the 2 percent stake in Tencent in April 2021 was excluded from headline and core headline earnings per share.

Published Jun 17, 2022

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Shares in tech firms Naspers and Prosus closed 4 percent higher on Wednesday after the tech firms flagged an earnings boost due to a once off bonanza from the $12.3 billion sale of a 2 percent stake in tech giant Tencent.

This was despite saying their annual headline earnings and core earnings were likely to decline.

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Prosus said based on Naspers’s anticipated results for the year ended March 31, 2022, it expected its annual headline earnings to decrease based on Nasper’s forecast annual results.

Prosus said earnings per N share were likely to be up between 167 percent to 174 percent at $7.67 – $7.99 per share. (Naspers said earnings per share would be between $29.33 – $30.20, up between 236 – 243 percent.) Prosus/Naspers said the once-off gain for the sale of the 2 percent stake in Tencent in April 2021 was excluded from headline and core headline earnings per share.

“In a year marked with continued global turmoil and uncertainty, which has made for a turbulent operating environment, financial year 2022 was a year of progress for Prosus. We remained focused on executing our long-term strategy and delivering strong operational growth across our core segments,” Prosus said.

Prosus/Naspers highlighted that they had made strategic investments and laid the foundation for future growth across the portfolio.

“We invested $6.2 billion (R99bn) in new acquisitions and existing businesses to expand our ecosystems, mainly in Edtech and Food Delivery, and to position the business for continued long-term growth in line with the group’s long-term strategy,” they said.

Prosus headline earnings per share (heps) were expected to decrease by between 47 - 40 percent in the current year, with Naspers’s heps to slide between 46- 39 percent, at between $29.33 – $30.20 a share.

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This was mainly due to the decrease in contribution to headline earnings from associates including lower fair value gains in the current year, continued investment in growth adjacencies in its e-commerce businesses and increased net finance cost.

Prosus’s board said it considered core headline earnings an appropriate indicator of the operating performance of the group, as it adjusted for non-operational items.

Prosus’s core headline earnings per share for the current year was expected to decrease by between 63-42 cents per share at between 21-14 percent (Naspers between 15-8 percent lower at between122-65 cents per share).

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This was primarily due to continued investment in growth adjacencies in its e-commerce businesses, a decreased contribution from Tencent due to the 2 percent divestment earlier this year and increased net finance cost.

More details would be published with the annual report on Monday, June 27, Prosus said.

Shares in Prosus rose 4.01 percent to close at R832.40, while Naspers shares leapt 4.23 percent to close at R1813.57 on Wednesday.

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Last week shares in both firms leapt buoyed by the stake in China’s Tencent after it announced it was releasing its flagship mobile game “Honor of Kings” globally by the end of the year and as China’s government approved a raft of new game licences.

BUSINESS REPORT

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