Today we have a reporting company and good news from South Africa and, via Washington, DC, for the Dutch Antilles and more.

Tech & Tel

South African Naspers reported core headline FY 2017-8 earnings up 72% at $2.5 billion on revenues up 38% to $20.1 billion. EPS came to $5.81/sh vs prior year's $3.37/sh. NPSNY is a 31% owner of Tencent of Hong Kong which has only a gray market ADR, TCEHY. Core headline earnings excludes one-offs like the sale of about 2% of NPSNY last FY as well as other non-operational gains. The net and media company's shares are up another 3% today after rising 8% yesterday in UK trading.

Here is more color from the company's press release: Fiscal-year revenues on economic interest basis were up 38%, to $20.1 billion while Internet revenues which account for 80% of the total were up by 50% to $15.9 billion. It declared a final dividend per share of $6.50. Trading profits also increased 50% (56%), fueled by e-commerce and Tencent’s strong results. Classifieds, business-to-consumer payments, and food delivery contributed to an acceleration in e-commerce revenue growth by 25% while increased scale trimmed the e-commerce segment’s trading losses by 8% to $673 million and resulted in a considerable improvement in trading margins. 

Classifieds (excluding letgo) turned profitable and cash generative during the year. The contribution from profitable e-commerce businesses, for the first time, now matches video entertainment where it faces international competition. However video entertainment sale nonetheless rose 8% to $3/7 billion thanks to direct-to-home also up by 1 million subscribers plus a half million new digital terrestrial TV subscribers. The total households it reaches in Africa despite weak economies if 13.5 million.

During FY 17-8. NPSNY strengthened its position in online food delivery by investing a combined $1.4 bn in Delivery Hero and Swiggy. Moreover, NPSNY got from its payments business into broader fintech services by investing in Kreditech, a credit-scoring business, and Remitly, a technology-driven remittance business, for a combined $199 million. Equity-accounted investments contributed US$3 billion to core headline earnings, an increase of 45% year on year. Consolidated free cash outflow was $242 million, with working capital movements, notably video entertainment prepaid content rights renewals hitting hardest – having a significant impact.

Following the disposal of Tencent shares, Naspers held net cash of $8.2 billion at year-end to fund future opportunities. “In the year ahead, we will use our strong balance sheet to accelerate the growth of our classifieds, food delivery, and fintech businesses globally. Also to pursue other growth opportunities when they arise,” said Naspers CEO Bob van Dijk. “We will continue to scale the e-commerce and sub-Saharan Africa video entertainment businesses and drive them closer to profitability. We will also focus on ithe area of machine learning,” he added.

Tencent itself meanwhile is backing the Hong Kong IPO of a travel agency, Tongchen Yilong, which is aiming to raise RMB 22.3 billion. TCEHY must put its funds into any pot on offer in the Chinese market because of the tough competition from other internets with a broader listing. The performance of NPSNY was not about its selling down its TCEHY position a bit, but about how the China business still has an enormous impact. TCEHY is easier to track from the USA and more liquid, but also is ahead of itself price-wise, a FAANG from Hong Kong.

With car imports a key element of the Trump trade war the maker of robots for cars, Fanuc Corp. of Japan, is under pressure. FANUY.

However the robots for building railroads and power station made by Chinese Hollysys Automation, HOLI, are still going strong because of the belt and road initiative. It also builds nuclear power stations but so far only in China itself. I am waiting for a North Korean order.

Oil patch

OPEC's all-nighter which ended in the wee hours led to an agreement to boost oil output. Perversely, the accord led to a higher price for crude because the production boost was moderate rather than high. West Texas Intermediate prices gained 3.8% today to $68.02/bbl while Brent crude gained only 2.3% to $74.72. One reason may be that the dollar fell overnight while the oil price negotiations were going on. It will boost output of oil by 600,000 bbl/day but the cartel's way of counting this is not actually how many barrels are sold per day.

Schlumberger Ltd, incorporated in the Dutch Antilles, is up 4.1% on the US Supreme Court ruling that those violating patents outside the US can be fined within our country. This reversed a lower court ruling that SLB patents had only limited effect outside the country, and then reduced the damages SLB could bet by $93 million applied against ION Geophysical (IO) for infringing SLB technology to find subsea oil and gas. While not a US firm, SLB relies on US patents to protect its intellectual property outside the country because Curacao lacks a patent process and we are the nearest country which offers it. SLB was founded by two Alsatian brothers in the period during which Alsace-Lorraine was controlled by Germany (until 1918) and gains global reach by not being French or American. However it does apply US sanctions on Iran, worth a payback. It also may gain from the spike in oil prices post-OPEC. It rose even more in European trading before the Supremes ruled, up 4.7%.

BP plc is up 4.23% today on OPEC and a write-up by seekingalpha.com's Steven Fiorillo which is signed and another from the UK Motley Food site. Unfortunately Fiorillo grossly overstated BP reserves. I am not sure if he used the Motley Fool report which I haven't read, but it's possible. BP is also now providing data to Platt's on Asian LNG prices. (My first journalistic job was with what was then the McGraw-Hill publication Platt's Oilgram). 

BP may be better off without the supermarket business of Australian Woolworth's which the Oz trust-busters banned yesterday. Its stock hit $46.50 in London but is now only $44.16. The ADR is equal to 6 UK shares. The British company got the taxman there to drop the 1.5% fee on “scrip dividends” (dividends paid with shares rather than cash) and this means future non-cash dividends can also be offered to US investors. I dislike the DRIP system because of the paperwork.

Drugs

Blockbuster sales of its new shingles jab, Shingrex, caused supply problems for GlaxoSmithKline in the US where the FDA recommends that even those who earlier got the Merck Zostavax jab get Shingrex—if their doctor can find it. GSK has now suspended its ads for the inoculation which also caused problems earlier when drug stores and nurses sometimes injected it subcutaneously like the Merck jab—but it is supposed to be injected into muscle and requires two doses. So far it has only been launched in the US. 

Roche next Tuesday either gets or doesn't get the FDA's permission to market Avastin plus chemotherapy for advanced ovarian cancer for which there aren't many options. RHHBY is Swiss.

My old song was never trade Teva on Friday (when Tel Aviv is shut) but the new version is never trade Teva on Thursday because you have to wait until Monday to trade again. TEVA fell 1.11% yesterday.

Australian Orocobre posted a booster set of films about how it is the only ASX-listed high-grade lithium producer. Unfortunately among the recent Schwab horrors has been denying me access to my main holdings which are in ORL-Toronto because I bought before the ADR, OROCF, was created. I think the CEO who is about to retire should work on getting a better ADR than one which only works when Sydney is sleeping. Its mines are also in our hemisphere, in Argentina.

Finance and Banking

Hargreaves Lansdown in London wrote up the favorable reactions there to the takeover of Virgin Money by Clydesdale & Yorkshire Banking Group: Challenger bank CYBG topped a sinking London market after its merger with Virgin Money won the blessing of City analysts who declared that it will finally create a “national competitor” to break the big four lenders’ stranglehold. CYBG and Virgin Money’s £1.7 billion all-share tie-up is the latest in a wave of challenger bank consolidation deals amid climbing costs and fierce competition. than two drunks propping each other up at a bar,Panmure Gordon argued in an upgrade to buy that the cost savings will 'significantly improve profitability'. A full product range offered by the combined entity will make it a national competitor to its larger rivals. JP Morgan backed CYBG boss Debbie Crosbie’s claim that a merger will create a 'proper' challenge to the big four because VM's’s mortgage and credit card customers would complement CYBG’s specialism in current accounts and small business banking.” I had no idea that CYBG is also a woman-headed bank. 

Good old Schwab has now imposed a $50 fee for trading this pink sheet stock, another reason to hold on while the ducks line up in a row. 

Another signed seekingalpha.com article by Khen Elazar supported buying slowly into Banco Santander whose recovery from the global financial crisis is proceeding as a dividend growth stock. Unfortunately my Schwab account keeps sending me news about Sanofi when I type in SAN, which unfortunately is the French ticker symbol for the drug firm. There is no excuse as NYSE-SAN is the ticker symbol of the stock I own. SAN is up 0.75% today on the bouncy European purchasing manager's index which hit 54.8 in June while the US one hit $56.5. Any number over 50 means growth, and this is a very big number by PMI standards. Note that sub SAN Consumer USA Holdings has seen insider selling reported to the SEC by SC.

For some reason Aberdeen Emerging Markets Equity & Income Fund subscribed to a fraud protection policy worth $100,000 for any single loss and a total of $1 million with UK insurer Willis Towers Watson Ltd, a related company. It covers stop payment orders, uncollectible deposits, audit expenses, unauthorized signatures, and telephone fraud by customers or staff. The closed-end fund just concluded a buyback which was heavily over-subscribed. 

The former Chile Fund (CF) is being used as a catchall for emerging markets CEFs from the Standard Life-Aberdeen stable which are being consolidated. This may be a way to boost earnings at SLFPY at the expense of the Aberdeen funds. This is a reason to vote against board candidate sitting on dozens of different funds from a group like Aberdeen.

City of London fund of funds, run by Barry Olliff, sold down its stake in Korea Fund by 1200 shares at $38.8/sh, not exactly a big change as it remains a 10% owner of KF which rose 1.4% today. It may also reflect a change in net asset value which is tallied on Fridays.

Our SPDR Citi International Government Inflation-protected Bond ETF is switching its benchmark from SPDR Citi bonds to FTSE International Government Inflation-Linked Securities Select (from Russell) and changing its name to SPDR FTSE International Govt Inflation-Protected Bond ETF. FTSE Russell is owned by the London Stock Exchange which last August acquired the Citi Fixed Income Indices.

Our contributor Frida Ghitis is among those who get credit for using the term “gaslighting” to describe Trumpian attempts to convince us against the evidence of our own eyes, based on an article she wrote for CNN, her main employer. Frida is a free-lancer who gets to travel for her better paid gigs and looks for investment ideas when she hits foreign lands. But I never realized that the Colombia-born writer is the Dr Johnson of our generation. You can read Frida's article here.

Note that Frida began life speaking Spanish which makes her evocation of the old movie with Ingrid Bergman even more amazing.