SoftBank Group booked a huge loss in its fiscal Q2 ending 30 September, as the value of its Vision Fund plunged due to sharp declines in its portfolio of China-based start-up companies following stricter regulations in the country.
The company reported a net loss in the July to September period of JPY397.9 billion ($3.52 billion), reversing a net profit of JPY627.5 billion in the same period a year earlier.
In an earnings call, chairman and CEO Masayoshi Son (pictured) said the company is in the middle of a big winter storm, which for shareholders is a “big event, but at the same time, I am not that pessimistic”.
With China investments accounting for just 20 per cent of its net asset value, down significantly from a year ago, Son stated: “I don’t think that China risk is so huge. I think it’s a manageable level.”
In August, he announced it would stop investing in Chinese companies [1] until the impact of new regulations on tech companies becomes clear.
The Vision Fund lost JPY825.1 billion as the value of its holdings in companies such as Didi and Coupang dropped sharply. The loss was offset by JPY456 billion in gains from the sale of stakes in a number of investments, including DoorDash.
The value of its holding in Chinese e-commerce company Alibaba, its largest investment, fell by about a third, driving its total loss on investments to JPY1.66 trillion.
Revenue in the quarter increased 11.4 per cent to JPY1.5 trillion.
Son said it plans to buy back up to JPY1 trillion of its own shares, aiming to complete the repurchase in one year, but noted the timing will be agreed on by the board.
[1] https://www.mobileworldlive.com/asia/asia-news/softbank-halts-china-investments
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