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.

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>  reported 1Q21 results on Thursday (20th May) which saw revenues growing 25% YoY to RMB135.3bn (versus consensus revenue of RMB133.8bn) while operating profit (non-IFRS) increased 20% YoY to RMB42.8bn (IFRS OP of RMB56.3bn versus consensus OP of RMB42.8bn) during the quarter.Despite the ongoing regulatory concerns regarding the company’s fintech business, past M&amp;A deals and WeChat User data, Tencent’s businesses continued to see strong performance during 1Q. However, Tencent’s core online advertising revenue and its Weixin &amp; WeChat user growth are slowing down.

Tencent (700 HK)  reported 1Q21 results on Thursday (20th May) which saw revenues growing 25% YoY to RMB135.3bn (versus consensus revenue of RMB133.8bn) while operating profit (non-IFRS) increased 20% YoY to RMB42.8bn (IFRS OP of RMB56.3bn versus consensus OP of RMB42.8bn) during the quarter.Despite the ongoing regulatory concerns regarding the company’s fintech business, past M&amp;A deals and WeChat User data, Tencent’s businesses continued to see strong performance during 1Q. However, Tencent’s core online advertising revenue and its Weixin &amp; WeChat user growth are slowing down.

Tencent: Earnings Beat Consensus; Falling User Growth and Game Revenue Growth Concerning

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.

Thematic (Sector/Industry)

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.  Companies mentioned this week:<a href="https://www.smartkarma.com/entities/meituan-dianping" target="_blank" data-smartkarma-citation="entities:26970:1" rel="noopener">Meituan (3690 HK)</a>, <a href="https://www.smartkarma.com/entities/xiaomi-corp" target="_blank" data-smartkarma-citation="entities:24409:1" rel="noopener">Xiaomi Corp (1810 HK)</a>, <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a>, <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/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, <a href="https://www.smartkarma.com/entities/samsung-electronics-co-ltd" target="_blank" data-smartkarma-citation="entities:191:1" rel="noopener">Samsung Electronics (005930 KS)</a>, <a href="https://www.smartkarma.com/entities/sk-hynix-inc" target="_blank" data-smartkarma-citation="entities:16955:1" rel="noopener">SK Hynix (000660 KS)</a>

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity indices.  Companies mentioned this week:Meituan (3690 HK), Xiaomi Corp (1810 HK), Naspers (NPN SJ), Prosus (PRX NA), Tencent (700 HK), Samsung Electronics (005930 KS), SK Hynix (000660 KS)

Global Emerging Markets Weekly: 14 May 2021

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<div>
Back in September 2019, the spinoff/listing of <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a> was predicated on the "unsustainable size" of <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> as a % of the JSE Shareholder Weighted Index (SWIX) - and to unlock value for shareholders.
Yesterday, Naspers and Prosus <a href="https://www.share-exchange-offer.com/wp-content/uploads/2021/05/naspers-announcement.pdf" target="_blank" rel="noopener">announced</a> a Proposed Voluntary Share Exchange Offer to Naspers Shareholders, which again addresses the SWIX situation, and if successful till increase Prosus' free float to 42.8%, with 59.7% of the economic interest of Prosus owned by that free float (and 40.3% owned by the free float of Naspers).
The unwieldy deal offers 45.4% of Naspers issued shares the option of converting shares into Prosus at a ratio of 2.27443x.
Assuming all the pieces neatly fit together, Naspers will own 57.2% of Prosus, and Prosus 49.5% of Naspers. 
This resulting circularity is reminiscent of the <a href="https://www.smartkarma.com/entities/jardine-matheson-holdings-ltd" target="_blank" data-smartkarma-citation="entities:19718:1" rel="noopener">Jardine Matheson Holdings (JM SP)</a> / <a href="https://www.smartkarma.com/entities/jardine-strategic-holdings-ltd" target="_blank" data-smartkarma-citation="entities:15081:1" rel="noopener">Jardine Strategic Holdings (JS SP)</a> cross-holding, which was collapsed earlier this year.
This time, the holders of Naspers super-voting shares are the "Keswicks". 
</div>


Back in September 2019, the spinoff/listing of Prosus (PRX NA) was predicated on the "unsustainable size" of Naspers (NPN SJ) as a % of the JSE Shareholder Weighted Index (SWIX) - and to unlock value for shareholders.
Yesterday, Naspers and Prosus announced a Proposed Voluntary Share Exchange Offer to Naspers Shareholders, which again addresses the SWIX situation, and if successful till increase Prosus' free float to 42.8%, with 59.7% of the economic interest of Prosus owned by that free float (and 40.3% owned by the free float of Naspers).
The unwieldy deal offers 45.4% of Naspers issued shares the option of converting shares into Prosus at a ratio of 2.27443x.
Assuming all the pieces neatly fit together, Naspers will own 57.2% of Prosus, and Prosus 49.5% of Naspers. 
This resulting circularity is reminiscent of the Jardine Matheson Holdings (JM SP) / Jardine Strategic Holdings (JS SP) cross-holding, which was collapsed earlier this year.
This time, the holders of Naspers super-voting shares are the "Keswicks". 


Travis Lundy

Today, <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> and <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a> surprised most of us by announcing a Proposed Voluntary Share Exchange Offer to Naspers Shareholders. The deal involves offering Naspers shareholders the chance to convert their Naspers shares to Prosus shares at a premium to the last trade and recent value, and offer "value" to Prosus shareholders via accretion.The resulting complexity is, however, less attractive. The initial response was to see the Naspers-Prosus spread tighten. The next response is to widen back out a bit. The coming days will tell you what the real response is. The response of the Prosus:NAV ratio is the more informative of the two. Eventually, the model accretion plus buyback accretion at Prosus should win shareholders over, and domestic Naspers shareholders should find the structure slightly attractive, but the call made clear that despite executives having spent a LOT of time on this, they clearly hadn't thought everything through.

Today, Naspers (NPN SJ) and Prosus (PRX NA) surprised most of us by announcing a Proposed Voluntary Share Exchange Offer to Naspers Shareholders. The deal involves offering Naspers shareholders the chance to convert their Naspers shares to Prosus shares at a premium to the last trade and recent value, and offer "value" to Prosus shareholders via accretion.The resulting complexity is, however, less attractive. The initial response was to see the Naspers-Prosus spread tighten. The next response is to widen back out a bit. The coming days will tell you what the real response is. The response of the Prosus:NAV ratio is the more informative of the two. Eventually, the model accretion plus buyback accretion at Prosus should win shareholders over, and domestic Naspers shareholders should find the structure slightly attractive, but the call made clear that despite executives having spent a LOT of time on this, they clearly hadn't thought everything through. 

Naspers & Prosus Exchange Offer - Accretion Vs Complexity

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.

<div>
Today morning <a href="https://www.smartkarma.com/entities/prosus-nv-75c7a0c4-16ff-4433-a40f-25ae5b24077d" target="_blank" data-smartkarma-citation="entities:28498:1" rel="noopener">Prosus NV (PROSY US) </a>announced that it would acquire 45.4% of <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)'s </a> issued N Share capital through a voluntary offer to be settled with newly issued Prosus Shares. This will result in Prosus owning 49.5% of Naspers, which in turn will still own 57.2% of Prosus.
In this note, we will look at the current structure revamp.
We have looked at Prosus in the past as a part of covering the Tencent placement, our last note was <a href="https://www.smartkarma.com/insights/tencent-placement-and-the-holdco-implications-deal-almost-done-now-what" target="_blank" rel="noopener">Tencent Placement and the Holdco Implications - Deal Almost Done, Now What?.</a>
</div>


Today morning Prosus NV (PROSY US) announced that it would acquire 45.4% of Naspers (NPN SJ)'s  issued N Share capital through a voluntary offer to be settled with newly issued Prosus Shares. This will result in Prosus owning 49.5% of Naspers, which in turn will still own 57.2% of Prosus.
In this note, we will look at the current structure revamp.
We have looked at Prosus in the past as a part of covering the Tencent placement, our last note was Tencent Placement and the Holdco Implications - Deal Almost Done, Now What?.


Prosus/Naspers Holdco - Round Tripping US$46bn

South Africa

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

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Naspers (NPN SJ)

Tencent: Earnings Beat Consensus; Falling User Growth and Game Revenue Growth Concerning

Tencent’s 1Q21 revenues and profits saw strong growth, however, we are concerned about the slow down in online games revenue growth as the segment...

Shifara Samsudeen, ACMA, CGMA

Global Emerging Markets Weekly: 14 May 2021

This insight provides a summary of the key news developments impacting the largest countries and constituents of the Global Emerging Markets equity...

Wium Malan, CFA

Naspers/Prosus: South African "Keswicks"

The overall construct is accretive, but is a more complex accretion and complexity has its costs in terms of a discount rate. And circularities, as...

David Blennerhassett

Naspers & Prosus Exchange Offer - Accretion Vs Complexity

Naspers and Prosus propose an Exchange Offer for 45.4% of Naspers to receive Prosus shares. Prosus will own 49.5% of Naspers. There is accretion,...

Travis Lundy

Prosus/Naspers Holdco - Round Tripping US$46bn

Prosus announced that it would acquire 45.4% of Naspers via a voluntary offer to be settled with new Prosus Shares. This will result in Prosus...

Sumeet Singh

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