Research archive for PRX

Since the lows in October 2022 Tencent has rallied 87%. That is a big move for a company with a market cap now of around $430 billion. It's also great news for Naspers and Prosus shareholders. On Wednesday, Tencent reported solid numbers which resulted in a further 8.3% rally in the share price on Thursday.

On Friday night, Prosus/Naspers announced that they had sold one of their Russian businesses. Prosus sold Avito, a classifieds website, to Russian billionaire Ivan Tavrin for 151 billion Rubles - about $2.4 billion. In the overall Prosus stable, this is a relatively small deal worth about 2% of their market capitalisation.

After a short break, Prosus is back to making deals. This time they have offered 1.5 billion Euros to buy out the 33.3% stake in iFood that they don't already own. iFood is the biggest food delivery company in Brazil with a market share of around 80%. They process 65 million orders a month from 300 000 restaurants. The business has real scale.

Swiggy just raised $700 million from investors at a valuation of $10.7 billion. The SoftBank-backed Indian food-delivery platform will use the cash to expand its on-demand grocery services which are in high demand right now. The start-up had already raised more than $1.25 billion just six months ago, so it's burning through cash pretty quickly.

The largest shareholder in the Russian internet and social media company VK (formerly known as Mail.ru), sold its 57.3% stake to insurer Sogaz ahead of a delisting. Sogaz is part-owned by a longtime ally of the Kremlin, Yuri Kovalchuk. Why is this interesting? Prosus has a minority stake in VK.

On Monday morning Prosus/Naspers released their six-month financial update. Naspers and Prosus are effectively the same entity, so for ease of reference, I'm going to only refer to Prosus here.

Yesterday Prosus released solid looking numbers. When Prosus releases numbers, we like to focus on their 'rest of business' figures because we already know what is happening with Tencent.

After selling nearly $15 billion worth of Tencent shares, it hasn't taken Prosus long to make some deals. Last night they announced the purchase of a knowledge sharing platform called Stack Overflow for $1.8 billion. This will be added to their Edtech portfolio. Here are some details from the press release.

The big news yesterday was that Prosus is making an offer to buy 45.4% of Naspers. This is all part of the management team's goal of reducing the NAV discount. At present, Naspers trades on about a 48% discount to NAV and Prosus "only" at a 36% discount. The idea is to move shares from the high discount company to the low discount company, thus 'unlocking value for shareholders'.

Over the last year Prosus is up 60% and Naspers is up 44%. See the comparative graph below, Prosus is the blue line. Since the Prosus spinoff in September 2019 the outperformance has been about 14%. My calculations suggests that the spinoff has created around R400 billion extra value for shareholders.

A few days back Prosus released their half-year results for the period ending 30 September 2020. For the sake of simplicity I am going to ignore Tencent as we have covered that one in detail separately. I am also only going to cover only Prosus as Prosus is Naspers' biggest asset by far.

Prosus is set to enter the EuroSTOXX 50 index on September 18, having finally satisfied the criteria for inclusion at the end of August.

On Friday evening, Naspers and Prosus released their full-year numbers. These companies are mostly interchangeable - Naspers owns 3/4 of Prosus and that stake in Prosus represents 99% of Naspers value. Generally, the market doesn't pay much attention to these results because the bulk of Prosus's value comes from its stake in Tencent, which trades on the Hong Kong stock exchange. Each day, the Tencent price changes in Hong Kong, and then the Prosus and Naspers share prices move in accordance when the European and South African markets open.

Prosus continues to work hard on small deals behind the scenes. Late last week it was announced that they had invested in an Indonesia based logistics technology company called Shipper.

Prosus are certainly not sitting still. This morning they announced another deal, this time in Brazil. OLX Brazil which is 50% owned by Prosus is purchasing Grupo ZAP for $650 million (R10bn). In case you forgot, OLX is the biggest online classified business in Brazil. Grupo ZAP specialises in online real estate. OLX feels that the combination of site traffic, properties, product and technology between the two companies is very beneficial.