COMPANY NEWS IN BRIEF
As Naspers gears up to battle over AI, it sees its SA roots as a plusNaspers, along with consumer internet subsidiary Prosus, said on Tuesday that Amazon should be worried about competition from Takealot, rather than the other way around.
The group is generally viewing its footprint in emerging markets like Brazil, India and SA as reasons to be optimistic as global players battle over the emerging technology of artificial intelligence, saying it expects to be better positioned to leverage its business ecosystems in growth markets to offer major productivity and efficiency gains.
Naspers, which receives the majority of its earnings from Amsterdam-listed subsidiary Prosus, reported on Monday that it booked consolidated e-commerce profitability for the first time, and six months ahead of schedule, with all its divisions, spanning edtech to food delivery, seeing improvements. In SA, Mr D also achieved its first trading profit of $3 million (about R55 million), Takealot cut its losses, and while Media24 is giving up on a number of newspapers, the online business remains profitable as well.
Speaking during a media roundtable on Monday, interim CEO Ervin Tu said despite achieving its e-commerce profit target, not much has actually changed in terms of investment strategy, with the group still looking for opportunities, as well as further improvements in its underlying business.
Naspers reported that its SA etail segment reduced its trading loss about 42% to $49 million, with Takealot.com growing its gross merchandise value by 13% and reducing trading losses by $4 million.
Naspers SA CEO Phuthi Mahanyele-Dabengwa said the group was pleased with growth in a challenging environment, with Takealot, among other measures, pushing into the township economy and now having over 10 000 small and medium-sized businesses on its platform.
The group is also encouraged by some regulatory developments, including a change to de minimus rules that ensure Chinese fast fashion giants Shein and Temu can't benefit from rules meant for small parties. She added Amazon had not succeeded in every market it entered. Bloisi added that it is normal for the group to compete with major US companies in its markets, and had won in many of them.
-NEWS24-
Brait reports annual loss as net asset value falls amid massive recapitalisation
Brait, the private equity firm partly owned by billionaire Christo Wiese, reported an annual loss as the value of its underlying asset base declined amid a massive recapitalisation and unbundling plan that is meant to unlock shareholder value.
The company said on Tuesday that its key reporting metric of net asset value (NAV) per share fell 8% to R6.52 in the year to end March, from R7.06 in the previous financial year. From an International Financial Reporting Standards (IFRS) perspective, Brait reported a headline loss per share of 13 cents, though this was narrower than the 70 cents a share loss the prior year.
The annual loss announcement came just one day after Peter Hayward-Butt , who is joint CEO of Ethos Capital and Brait, would step down from 1 July amid a massive recapitalisation that will virtually double its number of shares in issue via a R1.5 billion rights offer and a three-year extension of bond repayments that were due at end-2024, along with a partial debt reduction. Ethos Capital, which owns part of Brait and has managed the company since late 2019, also plans to unbundle its stake by distributing the ordinary shares it holds to its own shareholders.
In the meantime Brait will now proceed with its plans for a fully underwritten rights offer to raise about R1.5 billion by issuing new shares at a 25% discount to the theoretical rights offer price of 79 cents. Brait’s share price rose 3.5% to 90 cents after its results were published on Tuesday.
"The recapitalisation meaningfully reduces the group's debt and strengthens the Brait balance sheet, providing runway for all stakeholders to benefit from the continued recovery in Virgin Active and New Look and the growth in Premier," Brait said. "It gives Brait the ability to choose the earliest optimal exit window for each asset, providing increased flexibility to redeem the Bonds, which may allow for the return of capital to stakeholders in the event of an earlier exit of the asset base."
Brait also said its advisory agreement service fee with Ethos, which stands at R50 million for the 2025 financial year versus R65 million for 2024, will continue to apply annually until Brait's remaining investments are either sold or unbundled to shareholders. Thereafter, to conclude Brait's planned winding up, a revised service fee of R1.5 million a month will take effect from the start of the following quarter.
-NEWS24-
Oracle warns about TikTok ban
Oracle warned investors that a new law potentially banning TikTok in the US threatens to hurt its financial results.
The law signed by President Joe Biden in April “will make it unlawful to provide internet hosting services to TikTok” unless certain steps are taken by its China-based owners, Oracle wrote Thursday in a regulatory filing.
“If we are unable to provide those services to TikTok, and if we cannot redeploy that capacity in a timely manner, our revenues and profits would be adversely impacted.”
Compliance with the new law may also increase expenses, the company added.
TikTok uses Oracle’s cloud infrastructure to store and process US user data, and is considered by many Wall Street analysts to be one of the Austin-based company’s largest customers for that closely watched business.
“Oracle could lose a sizable portion of revenue associated with hosting the bulk of TikTok’s US business,” Derrick Wood, an analyst at TD Cowen, wrote in April.
Oracle’s annual revenue from the popular video app may be in the range of $480 million (R8.7 billion) to $800 million (R14.5 billion), estimated Kirk Materne, an analyst at Evercore ISI.
The company’s unit that rents computing power and storage generated about $6.9 billion (R124.7 billion) in sales in the year ended May 31.
The growing cloud infrastructure business, fueled by demand for artificial intelligence work, has helped propel Oracle’s shares to a 34% gain this year through Friday’s close.
-BLOOMBERG-