Is Naspers still a buy after Prosus listing?

In this article we look at Naspers and the separation of its international assets onto the Euronext Amsterdam Stock Exchange, as well as assess whether these company's are offering value to traders and investors.

Naspers shareholders approve Prosus listing

Naspers Ltd the locally listed investment holding company, with its primary interests in the global internet and entertainment sector, has won shareholder approval to separately list the groups international assets.

Where and when will Prosus be listed?

The international assets will be listed under the company name Prosus. Prosus will have primary listing on the Euronext Amsterdam Stock Exchange and an inward listing on the Johannesburg Stock Exchange (JSE). The new listing is scheduled for the 11th of September 2019.

What assets are being separately listed?

The Prosus business will be comprised of all of Naspers internet business outside of South Africa, which includes (but is not limited to) investments in online classifieds, payments, fintech, entertainment, social and internet platforms.

Some of the company’s interests include Tencent, Mail.ru, PayU, DeliveryHero, iFood and MakeMyTrip (to name but a few).

Prosus, a strategic investor and operator of leading technology companies globally, is expected to become the largest listed consumer internet business by asset value in Europe.

Why is Naspers separately listing Prosus

Naspers is looking to separately list its international assets with the aim of: reducing the company’s weighting on major South African indices, unlocking investor value, as well as accessing more investor liquidity in the international market place.

Is there still value in Naspers?

While Naspers is separately listing its international assets, the group will still retain a holding of at least 73% of the Prosus business. While the separate listing will see the group’s exposure to these assets reduced, Naspers will still have a sizeable controlling stake within the business.

Naspers’ current 31% holding in Chinese internet and gaming giant Tencent, is by far the groups most valuable asset. The value of the investment holding in Tencent, exceeds the current market value prescribed to Naspers. In turn we see Naspers trading at roughly a 32% discount to its Net Asset Value (NAV). The separate listing of Prosus is expected help the group unlock some of the value not yet prescribed to these other assets. However, the future value of Naspers will still be predominantly linked to the market performance of Tencent Holdings and it must be considered that investment holding companies often trade at discounts to NAV, although admittedly not usually as large a discount as we have seen in Naspers over the years.

A Thomson Reuters poll of 11 analysts have an average long-term rating of ‘buy’ for Naspers.

If we consider the relevance of Tencent Holdings to the share price of Naspers and Prosus, it makes sense to gauge institutional sentiment on Tencent Holdings as well.

A Thomson Reuters poll of 46 analysts have an average long-term rating of ‘strong buy’ for Tencent Holdings.


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