SoftBank arm posts $2 bn Q1 profit

TOKYO: SoftBank Group Corp’s Vision Fund unit posted on Tuesday a first-quarter profit of $2.14 billion as gains from listing portfolio companies were offset by falling shares in firms like e-retailer Coupang Inc.

The Japanese conglomerate posted record annual profit in May with executives pointing to further upside from Vision Fund investments such as Chinese ride-hailing firm Didi Global Inc and “Uber for trucks” startup Full Truck Alliance Co Ltd.

Those companies listed in New York during the quarter but Chinese regulatory action has subsequently hammered valuations, underscoring SoftBank’s China risk even as the group seeks to reduce dependence on its largest asset, a stake in Chinese e-commerce giant Alibaba Group Holding Ltd.

The shift has cast a chill on SoftBank’s investing in China, which makes up about a quarter of its funds’ portfolio.

“Until the situation is clearer we want to wait and see,” said SoftBank chief executive officer Masayoshi Son.

“In a year or two I believe new rules will create a new situation.”

While the crackdown has affected returns expectations, “Our broader thesis in China is unchanged: It’s still a large, growing and compelling economic opportunity,” said Navneet Govil, the chief financial officer of Vision Fund.

The turmoil is clouding the outlook for the group, whose shares have slipped a third from two-decade highs in March amid the completion of a record 2.5 trillion yen buyback.