JSE Eyes Tencent Listing: A Boon for Naspers and Prosus Shareholders?
The Johannesburg Stock Exchange (JSE) is actively pursuing a potential listing of tech giant Tencent. This news comes after the JSE streamlined the process for secondary listings from approved exchanges, including the Hong Kong Stock Exchange where Tencent is currently listed.
While a Tencent listing on the JSE would undoubtedly boost trading volumes, the real intrigue lies in the potential long-term benefits for Naspers and Prosus shareholders. These South African investment giants hold a significant stake in Tencent via Prosus, which is primarily listed in Amsterdam.
Currently, both Naspers and Prosus trade well below the combined value of their assets, with Tencent being the main driver. A JSE listing for Tencent could pave the way for a future spin-off of these investments, potentially unlocking significant value for shareholders. However, such a move seems unlikely in the immediate future. Management hasn’t hinted at spin-off plans, and the consistent dividends and potential sales of Tencent stock provide Prosus with crucial cash flow to invest in other ventures, some of which are still in their growth phases.
Redefine Properties (JSE: RDF)
Redefine Properties (RDF) focused on strategic controllables to drive growth in the first half of 2024, forgoing reliance on interest rate cuts. They optimized capital allocation by selling non-core assets to invest in high-growth markets, like their acquisition of a stake in Pan Africa Mall. This strategy, alongside a 4.8% rise in retail trading density, empowered Redefine to pursue rent hikes within the retail sector. Positive results were also seen in lease renewals across both retail and industrial properties.
The office sector, however, presented challenges due to oversupply. Despite this, Redefine’s office portfolio maintained a healthy 4.1% net operating income growth. They highlighted their diversification across retail, office, and industrial sectors as a key strength.
Redefine prioritizes sustainability initiatives, boasting an impressive 41 MW of installed solar photovoltaic capacity with plans to expand by another 21 MW in the coming year.
Internationally, Redefine increased their ownership in a Polish retail platform to a near-full occupancy rate of 99.2%.
Financially, Redefine remains secure with a healthy liquidity profile of R4.2 billion. Their well-managed debt maturity profile allows for comfortable refinancing, and a strategic 76.7% debt hedge protects them from high-interest rates for an average of 1.5 years.
Uber Technologies (NASDAQ: UBER)
Uber reported mixed results for the first quarter of 2024. Revenue exceeded analyst expectations at $10.13 billion, reflecting a 15% year-over-year increase. However, the company surprisingly posted a net loss of $654 million, or 32 cents per share, compared to analyst predictions of a profit.
This loss stemmed from a $721 million non-cash charge related to investment reevaluations, not core business performance. Excluding this, Uber’s adjusted EBITDA of $1.38 billion surpassed analyst estimates.
Despite the net loss, ridership remains strong. Uber’s monthly active users climbed 15% to 149 million, with completed trips increasing 21% to 2.6 billion. Gross bookings fell short of expectations at $37.65 billion, though both mobility and delivery segments saw growth.
Mobility bookings reached $18.67 billion (up 25% YoY), generating $5.63 billion in revenue (up 30% YoY). However, changes in the mobility business model negatively impacted revenue margins. Delivery bookings totaled $17.7 billion (up 18% YoY), with revenue reaching $3.21 billion (up 4% YoY). Similar to mobility, delivery margins also faced a decline due to business model adjustments.
Looking ahead, Uber projects gross bookings between $38.75 billion and $40.25 billion for Q2, slightly below analyst estimates. They anticipate adjusted EBITDA of $1.45 billion to $1.53 billion, in line with analyst expectations.
Sources: Engineering News; News24; CNBC.
Piece written by Trive Sales Trader, Kealeboga Molefe
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