Prosus sees up to 37% rise in first-half earnings on Tencent strength

Prosus expects a substantial increase in earnings per share for the first half of fiscal 2026, with earnings per ordinary share for continuing operations projected to rise between 28.1% and 37.0%, and total operations EPS forecast to grow 30.8% to 39.9%. This positive outlook is attributed to increased profitability across its consolidated and equity-accounted businesses, primarily Tencent, along with gains from Tencent share sales related to its share repurchase program and strong growth in its e-commerce segment. The company issued this trading update in parallel with its parent, Naspers, to comply with Johannesburg Stock Exchange rules for significant financial result deviations.

Analysis

Prosus projects a significant increase in earnings per share (EPS) for the first half of fiscal 2026, with continuing operations' EPS N expected to rise between 28.1% and 37.0% compared to 191 US cents a year prior. Total operations EPS N is forecast to grow between 30.8% and 39.9%, following 187 US cents in the previous period. This robust guidance was issued in compliance with Johannesburg Stock Exchange rules, given the expected deviation of over 20% from prior results.

The anticipated strong performance is primarily attributed to increased profitability across Prosus's consolidated and equity-accounted businesses, notably Tencent. Further contributing factors include gains from the sale of Tencent shares, which are linked to the company's share repurchase program, although these are excluded from headline and core headline EPS. Strong revenue and profitability growth in its consolidated Ecommerce businesses also underpin the positive outlook.

Core headline earnings per ordinary share N for continuing operations are projected to increase by 20.1% to 28.5%, excluding foreign-currency translation losses. The company emphasized its commitment to profitable growth, highlighting its global ecosystem model serving approximately 2 billion consumers across nearly 100 companies. This guidance, which "almost completely accounts for Naspers’s results," signals a strong fundamental outlook for the broader group.

Key Decisions for Investors

• Investors should consider the strongly positive earnings guidance from Prosus, indicating robust fundamental performance driven by key investments like Tencent and e-commerce growth.
• Given the significant projected EPS growth, a re-evaluation of Prosus's current valuation metrics may be warranted to assess if the market fully discounts this optimistic outlook.
• Recognize that Prosus's strong performance significantly influences its parent company, Naspers, suggesting potential positive read-through for Naspers's shares as well.