Global Emerging Market Equities, Propitious Research

Wium Malan, CFA

Global Emerging Market Equities

Independent, Fundamental Quantitative Research

Propitious Research

Fully independent, fundamental and quantitative equity research, focused on companies in the Telecommunication, Media, Technology, Internet and Healthcare sectors in the Global Emerging Markets. Idea generation focused on Quality stocks, trading below their intrinsic Value, with sound Corporate Governance.

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)'s</a> announced open-ended share repurchase programme, funded by on-market sale of its Tencent shares, is a significant positive catalyst to reduce its discount to NAV.</li>
<li>Continued operating losses will likely require funding through capital events, in the form of either asset sales or debt issuance.</li>
<li>Cash flow requirements and continued concerns around capital allocation should limit the reduction in the discount to NAV.</li>
</ul>



Prosus (PRX NA)'s announced open-ended share repurchase programme, funded by on-market sale of its Tencent shares, is a significant positive catalyst to reduce its discount to NAV.
Continued operating losses will likely require funding through capital events, in the form of either asset sales or debt issuance.
Cash flow requirements and continued concerns around capital allocation should limit the reduction in the discount to NAV.


Prosus: Finally, a Catalyst; Cash Flows, Capital Allocation, Should Limit Drop in Discount to NAV

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>Tencent’s share price is down 6.5% over the last five days as largest shareholder Prosus sais that it would sell down Tencent shares to fund the buyback of Prosus/Naspers shares.</li>
<li>Though Chinese regulators removed the ban on new game approval in April this year, none of Tencent’s new game titles received approvals in over the last two months.</li>
<li>Tencent’s 1Q2022 earnings were weak and we expect 2Q2022E earnings to further decelerate with resurgence of Covid cases in China alongside weak macroeconomy.</li>
</ul>


Tencent’s share price is down 6.5% over the last five days as largest shareholder Prosus sais that it would sell down Tencent shares to fund the buyback of Prosus/Naspers shares.
Though Chinese regulators removed the ban on new game approval in April this year, none of Tencent’s new game titles received approvals in over the last two months.
Tencent’s 1Q2022 earnings were weak and we expect 2Q2022E earnings to further decelerate with resurgence of Covid cases in China alongside weak macroeconomy.


Tencent: End of Another Quarter with No New Game Approval and Prosus Selling

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>It's been a long-time coming. <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a> and parent <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> will gradually sell down their stake in <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> to fund a share purchase program.</li>
<li>Preceding my comments on Prosus and Naspers, are the current setup/unwind tables for Asia-Pacific Holdcos. </li>
<li>These relationships trade with a minimum liquidity of US$1mn, and a % of market capitalisation greater than 20%.</li>
</ul>


It's been a long-time coming. Prosus (PRX NA) and parent Naspers (NPN SJ) will gradually sell down their stake in Tencent (700 HK) to fund a share purchase program.
Preceding my comments on Prosus and Naspers, are the current setup/unwind tables for Asia-Pacific Holdcos. 
These relationships trade with a minimum liquidity of US$1mn, and a % of market capitalisation greater than 20%.


StubWorld: Prosus & Naspers Gain On Buyback Funded By Tencent Share Sale

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<ul>
<li>Tencent sold US$3bn worth of SEA shares in Jan 22. The rest of its stake was locked up for six months.</li>
<li>The initial stake sale by Tencent didn’t go down too well and the stock is now trading over 63% below the deal price.</li>
<li>In this note, we will talk about the lock-up dynamics and recent updates.</li>
</ul>


Tencent sold US$3bn worth of SEA shares in Jan 22. The rest of its stake was locked up for six months.
The initial stake sale by Tencent didn’t go down too well and the stock is now trading over 63% below the deal price.
In this note, we will talk about the lock-up dynamics and recent updates.


SEA Lock-Up - Tencent Is once Again About to Be Free to Trim Its US$8bn Stake

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>
<a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a>/ <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> hold 28.78% of <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> and will be selling Tencent stock to fund their own buyback due to the large discount to NAV.</li>
<li>At 3-5% of <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>'s ADV, the selling will last from 9-15 years, though could take much longer (or not complete) if Prosus/Naspers' discount to NAV shrinks considerably.</li>
<li>Passive trackers will buy only around 12-14% of the incremental stock and this will lead to a big overhang on <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> in the near future.</li>
</ul>



Prosus (PRX NA)/ Naspers (NPN SJ) hold 28.78% of Tencent (700 HK) and will be selling Tencent stock to fund their own buyback due to the large discount to NAV.
At 3-5% of Tencent (700 HK)'s ADV, the selling will last from 9-15 years, though could take much longer (or not complete) if Prosus/Naspers' discount to NAV shrinks considerably.
Passive trackers will buy only around 12-14% of the incremental stock and this will lead to a big overhang on Tencent (700 HK) in the near future.


Tencent (700 HK): Impact of Prosus Selling & Passive Inflows

South Africa

Naspers Limited operates in the technology industry. The Company invests in global internet companies across the world.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Naspers (NPN SJ)

Prosus: Finally, a Catalyst; Cash Flows, Capital Allocation, Should Limit Drop in Discount to NAV

In this insight, we analyse Prosus’ operational performance, capital allocation decisions, cash flows, what that implies for the holding company...

Wium Malan, CFA

Tencent: End of Another Quarter with No New Game Approval and Prosus Selling

The second quarter of 2022 has not been any great for Tencent as none of its new game titles were included in the approved list while Prosus...

Shifara Samsudeen, ACMA, CGMA

SEA Lock-Up - Tencent Is once Again About to Be Free to Trim Its US$8bn Stake

Tencent sold US$3bn worth of SEA shares in Jan 22. The rest of its stake was locked up for six months, which will soon be over.

Sumeet Singh

Tencent (700 HK): Impact of Prosus Selling & Passive Inflows

Prosus holds 28.78% of Tencent - that is US$133.5bn. Selling stock could take 9-15 years and is heavily dependent on a few factors. Limited passive...

Brian Freitas

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Prosus: Finally, a Catalyst; Cash Flows, Capital Allocation, Should Limit Drop in Discount to NAV

In this insight, we analyse Prosus’ operational performance, capital allocation decisions, cash flows, what that implies for the holding company...

Wium Malan, CFA

Tencent: End of Another Quarter with No New Game Approval and Prosus Selling

The second quarter of 2022 has not been any great for Tencent as none of its new game titles were included in the approved list while Prosus...

Shifara Samsudeen, ACMA, CGMA

StubWorld: Prosus & Naspers Gain On Buyback Funded By Tencent Share Sale

Buying a material percentage of Prosus' float at 40%+, translates to a significant lift in NAV/share accretion, even if Tencent remains static. Go...

David Blennerhassett

SEA Lock-Up - Tencent Is once Again About to Be Free to Trim Its US$8bn Stake

Tencent sold US$3bn worth of SEA shares in Jan 22. The rest of its stake was locked up for six months, which will soon be over.

Sumeet Singh

Tencent (700 HK): Impact of Prosus Selling & Passive Inflows

Prosus holds 28.78% of Tencent - that is US$133.5bn. Selling stock could take 9-15 years and is heavily dependent on a few factors. Limited passive...

Brian Freitas