Our opinion on the current state of PROSUS(PRX)

On 11th September 2019, Naspers (NPN) separately listed Prosus (PRX) on the Euronext in Amsterdam to house all its international assets including its stake in Tencent, Mail.Ru, and other internet brands. Naspers holds 73% of Prosus, and there is a 25% free float. One of the benefits of the Euronext listing is that it removes the risk inherent in the rand, making Prosus a rand-hedge which rises when the rand weakens and vice versa. Prosus is now Europe's largest consumer internet company.

The main asset of Prosus is a 26% stake in Tencent - a Hong Kong-listed company that provides social media services and gaming in China. Tencent operates 10 of China's top 20 mobile applications, reaching over 1.1 billion users. However, Tencent remains vulnerable to the authoritarian regulators in China and their involvement in the gaming industry.

Prosus describes itself as, "...a global consumer internet group operating across a variety of platforms and geographies and is one of the largest technology investors in the world. The Prosus Group's businesses and investments serve more than 1.5 billion people in 89 markets and are the market leaders in 77 of those markets. The Prosus Group's consumer internet services span the core focus segments of Classifieds, Payments and Fintech as well as Food Delivery, plus other online businesses including Etail and Travel."

On 18th May 2022, Tencent issued a statement saying that its profit in the March 2022 quarter was half of what it had been in 2021, leading to a negative impact on Prosus shares. On 24th June 2022, the company said that it intended to sell some of its Tencent shares to finance an extended open-ended share buy-back program. This caused the share price to jump up. On 24th October 2022, the re-election of Chinese leader Xi Jinping for a third term caused Prosus shares to fall heavily, as Jinping is part of a faction in Chinese politics which aims to keep the "disorderly expansion of capital" under control.

In its results for the six months to 30th September 2023, the company reported revenue up 13% and headline earnings up 85%, "...primarily due to improved profitability of our e-commerce consolidated businesses and equity-accounted investments, particularly Tencent, and higher net interest income during the period." Core headline earnings per share (HEPS) almost doubled to 76c per share. Technically, the Prosus share has been trending up in November 2023. We still believe that the share is undervalued at current levels.

On 18th September 2023, the company announced that CEO, Bob van Dijk, would resign with immediate effect. On 17th May 2024, the company announced that Fabricio Bloisi would take over as CEO of both Naspers and Prosus with effect from 1st July 2024.