Mar 20 2009

Out of China: Good news for Naspers

Published by at 10:55 am under Companies,Top Stories

Judged on the annual results for 2008, Tencent Holdings, the Hong Kong-listed provider of internet, mobile and telecommunications services to China in which Naspers holds 36.1% (via MIH), should give the Naspers bottom line a much stronger boost this time around than it did last year.  

The company’s final results for 2008 were released in Hong Kong yesterday.  

Exactly how big the boost to the Naspers bottom line will be in rand terms, is still uncertain: The proposed dividend payment of 0.35 HKD per share (more than double the 2007 dividend) still has to be approved on 13 May for payment on 27 May, and we don’t know at what HKD/rand exchange rate the money will be brought to SA .

But, the contribution is likely to be much higher than in 2007. (From Naspers’ 2008 statements I couldn’t make out exactly how much Tencent had contributed in 2007; lumped with the Abril and mail.ru contributions, the combined contribution was pencilled in as R654 million.)

The exchange rate effect may be significant – the rand was about 20% weaker against the HKD today than it was a year ago (today’s rate R1.24 for 1 HKD).  

Tencent had a roaring year in 2008 – despite the global economy. Attributable profit rose by 77.8% to RMB 2.8 billion, on a 87.2% rise in revenue (to RMB 7.2 billion). All sources of income performed excellently – income from internet services rose 95.5%, income from mobile and telecommunications rose 73.2% and online advertising revenue rose 67.5%.  

The only “drol in die drinkwater” was the rather low growth in registered instant messenger users of 4.2% and the drop in average daily messages sent by 1.8% – the core business of Tencent. Management ascribed this to “seasonal factors” (students, a major user group, were writing exams).  

And in 2009? Here is an extract from the statements on the near-term outlook:

We believe our diversified business model puts us in a more resilient position compared to many other industries. For example, our Internet and mobile value-added services, which are characterized by user-paid small ticket consumption items, are relatively less vulnerable to an economic downturn.

Nevertheless, we are not immune to the global economic crisis. Our online advertising business has already been affected by the downturn towards the end of the fourth quarter when advertisers reduced their spending under a worsening economic environment. As we have just started to experience the rippling effect of the global recession on China, we believe the negative impact on our advertising business will be substantial in 2009 and it is very difficult to predict the timing of recovery.

Facing a more challenging environment, we have been controlling our expenses and managing our risks rigorously. At the same time, we are committed to making necessary investments in our business such that we can take advantage of the downturn to enhance our market position and emerge as an even stronger company when the macroeconomic environment improves.

On 31 December 2008 the Group had 6,194 employees (2007: 4,344), most of whom are based in the Company’s head office in Shenzhen.  

No responses yet

Trackback URI | Comments RSS

Leave a Reply