TCEHY - Prosus: A Great Long-Term Play With Clear Short-Term Upside Potential

2024-04-03 04:07:17 ET

Summary

• Prosus is a long undervalued stock trading at a >35% discount to its NAV, with strong potential for unlocking significant value through its investments.
• Prosus is one of the largest technology investors, with a diverse and high-quality investment portfolio in listed and privately held companies.
• Prosus is expected to benefit in the short term, as management reduces the holding discount and Tencent valuations improve.
• In the long term, Prosus sees strong tailwinds as its portfolio companies start taking market leadership positions and IPO over the coming years.

Investment thesis

Prosus ( PROSF , PROSY ) was spun off from Naspers in 2019, and has been a long undervalued stock. The company is an investment holding company, and is currently trading at a >35% discount to its NAV. The current share price of Prosus is less than its fair market value in Tencent (TCEHY). Apart from its stake in Tencent, the company also has multiple solid public and private investments such as OLX, Swiggy, Meesho, PayU, iFood, which are market leaders in their respective niches and are likely to unlock significant value as they IPO. Investments of Prosus are largely focused on growing markets like India, China, Latam etc. and are likely to yield rich rewards as the management is incentivized to reduce holding discounts. The stock is a buy, with strong tailwinds in the short & long term.

Company Overview And Holding Structure

Prosus is a global consumer internet group and one of the largest technology investors in the world. It is estimated that around one fifth of the world's population uses products and services of businesses that Prosus has built, acquired or invested in. Prosus differs due to its 'glocal' outlook and its role as both the Operator and Investor. The company invests primarily in high growth markets, including China, India, LATAM and Central/Eastern Europe. Prosus had its IPO in 2019, after breaking off from Naspers though it is still a majority shareholder in the company....

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