NAPRF - Living In Tencent's World: My Shanghai Perspective And The Prosus Opportunity

2025-01-25 10:56:40 ET

Summary

• Tencent's WeChat is a central hub in China, driving multiple revenue streams and offering a significant moat that Western tech giants envy.
• I prefer investing in Tencent through Prosus, which offers a discounted entry and benefits from Dutch tax laws and strategic buybacks.
• Prosus' double-buyback strategy enhances value creation by selling Tencent shares to repurchase its own undervalued shares, creating a compelling investment opportunity.
• Despite geopolitical risks, Tencent's ecosystem and Prosus' discount make them attractive long-term investments, with a potential for significant upside.

My View From Shanghai Lock-Down

I first moved to Shanghai in 2016, and my seven-year journey was long enough to become deeply familiar with China's tech landscape but also long enough to question some of the country's governance from my libertarian point of view. During the 2022 Shanghai lockdown, when I spent months inside my apartment, I saw firsthand just how deeply rooted Tencent ( TCEHY ) ( TCTZF ) and its WeChat ecosystem had become in the everyday lives of Chinese people. From ordering groceries, coordinating neighborhood activities, paying rent, playing games, sharing posts, or communicating with the government, WeChat is the digital backbone of life in China....

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