E-commerce loyalty worth it, says Van Dijk

NASPERS chief executive 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. Cape Town-based Naspers has ridden the coattails of the WeChat 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 $32 billion (R416.08) more than Naspers as a whole. Outflows of South African capital since late 2015 have contributed to the disparity, says Van Dijk.

He said the value gap will start to close as Naspers’s classified-advertising division, which includes Russia’s Avito, turns profitable in the current fiscal year. 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’s e-commerce unit, which recorded a loss of $682 million for the 12 months that ended in March, leaving out interest, tax, depreciation and amortisation.

“We are excited about a business like eMAG turning profitable,” Van Dijk said in an interview on Friday. “That will be a catalyst to recognising the value of our other assets.”

Naspers has for years scoured the world looking for another early-stage technology company that will replicate the success of Tencent, in which it invested $32m 16 years ago. The company has since put money into a wide range of assets, including Russia’s Mail.Ru Group and Indian travel agency MakeMyTrip. It sold Polish online auction site Allegro for $3.25bn last year.

Profitability 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’ experiences. “We have a big team that looks at using artificial intelligence in our classified platforms to eliminate spam ads, for instance,” said Van Dijk.

Earlier at the company’s annual meeting in Cape Town, chairperson Koos Bekker countered criticism that Naspers relies too heavily on its $132bn stake in Tencent. Bekker said that the assumption that Tencent is making money and Naspers’s other ventures are loss-making was “illiterate,” since profitability doesn’t accurately capture the value of the businesses.