Our opinion on the current state of PROSUS(PRX)
Naspers (NPN) spun off Prosus (PRX) on 11th September 2019, listing it on the Euronext in Amsterdam to hold its international assets, including Tencent, Mail.Ru, and other internet brands. Naspers retains a 73% stake in Prosus, while 25% is free float. This listing mitigates rand risk, making Prosus a rand-hedge investment that benefits from rand weakness. As Europe’s largest consumer internet company, Prosus's primary asset is a 26% stake in Tencent, a Hong Kong-listed company with over 1.1 billion users across its top 10 mobile applications in China. Tencent, however, remains exposed to Chinese regulatory challenges, particularly in gaming.
Prosus operates across classifieds, payments, fintech, food delivery, e-tail, and travel, serving 1.5 billion people in 89 markets. The company has been diversifying its revenue streams while managing risks associated with its heavy reliance on Tencent.
Recent developments include:
- May 2022: Tencent announced a sharp decline in profits, adversely affecting Prosus shares.
- June 2022: Prosus launched an open-ended share buyback program, funded partly by selling Tencent shares. This move boosted the share price.
- October 2022: Prosus shares fell after Chinese President Xi Jinping’s re-election, raising concerns over regulatory pressures.
In its March 2024 results, Prosus reported an 11% increase in revenue and an 84% rise in core headline earnings, highlighting the impact of its share repurchase program, which reduced the free-float share count by 21% and generated $30 billion in value for shareholders.
In its September 2024 trading statement, Prosus estimated a 112% to 122% rise in headline earnings per share (HEPS), attributing the growth to improved profitability and lower impairment charges.
Technical Analysis: Since November 2023, the Prosus share has been trending upwards. It remains undervalued at current levels, with robust financial performance and a strong buyback program contributing to investor confidence. The share's rand-hedge characteristics and diverse portfolio further strengthen its appeal. However, investors should remain cautious of Chinese regulatory risks tied to Tencent.
Prosus operates across classifieds, payments, fintech, food delivery, e-tail, and travel, serving 1.5 billion people in 89 markets. The company has been diversifying its revenue streams while managing risks associated with its heavy reliance on Tencent.
Recent developments include:
- May 2022: Tencent announced a sharp decline in profits, adversely affecting Prosus shares.
- June 2022: Prosus launched an open-ended share buyback program, funded partly by selling Tencent shares. This move boosted the share price.
- October 2022: Prosus shares fell after Chinese President Xi Jinping’s re-election, raising concerns over regulatory pressures.
In its March 2024 results, Prosus reported an 11% increase in revenue and an 84% rise in core headline earnings, highlighting the impact of its share repurchase program, which reduced the free-float share count by 21% and generated $30 billion in value for shareholders.
In its September 2024 trading statement, Prosus estimated a 112% to 122% rise in headline earnings per share (HEPS), attributing the growth to improved profitability and lower impairment charges.
Technical Analysis: Since November 2023, the Prosus share has been trending upwards. It remains undervalued at current levels, with robust financial performance and a strong buyback program contributing to investor confidence. The share's rand-hedge characteristics and diverse portfolio further strengthen its appeal. However, investors should remain cautious of Chinese regulatory risks tied to Tencent.
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