Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

On Friday 23 August 2019, <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" data-smartkarma-citation="entities:21085:1" rel="noopener">Naspers (NPN SJ)</a> shareholders <a href="https://www.newglobaltechgroup.com/media/1080/sens-results-of-egm-23-august-2019.pdf" target="_blank" rel="noopener">approved</a> (with the requisite majority 100% of A shares FOR, 95.51% of N Shares FOR) the special resolution as set out in the notice of the EGM pertaining to the approval of matters relating to the implementation of the Proposed Transaction, which is to form a new global consumer internet group, listing its global consumer internet assets held by Myriad International Holdings N.V. (previously referred to as NewCo and to be renamed <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" data-smartkarma-citation="entities:28104:1" rel="noopener">Prosus (PRX NA)</a>, a subsidiary of Naspers, incorporated in accordance with Dutch laws, on Euronext Amsterdam with a secondary, inward listing on the Main Board of the Johannesburg Stock Exchange.
So that's done. 
Now we get down to the nitty gritty. And it is a little gritty. 
First, the <a href="https://www.newglobaltechgroup.com/media/1083/amco-11006822-v1-prosus_n_v__prospectus.pdf" target="_blank" rel="noopener">Prospectus</a> is out as of Monday at <a href="http://www.prosus.com" target="_blank" rel="noopener">www.prosus.com</a>. 
This is a situation which deserves a bit of thinking and a bit of arithmetic. So we have both below.
I'll have more in the follow-up piece out shortly which will look at indices, flows, ownership, and some of the more subtle details of the mechanics of the listings and future flows.

On Friday 23 August 2019, Naspers (NPN SJ) shareholders approved (with the requisite majority 100% of A shares FOR, 95.51% of N Shares FOR) the special resolution as set out in the notice of the EGM pertaining to the approval of matters relating to the implementation of the Proposed Transaction, which is to form a new global consumer internet group, listing its global consumer internet assets held by Myriad International Holdings N.V. (previously referred to as NewCo and to be renamed Prosus (PRX NA), a subsidiary of Naspers, incorporated in accordance with Dutch laws, on Euronext Amsterdam with a secondary, inward listing on the Main Board of the Johannesburg Stock Exchange.
So that's done. 
Now we get down to the nitty gritty. And it is a little gritty. 
First, the Prospectus is out as of Monday at www.prosus.com. 
This is a situation which deserves a bit of thinking and a bit of arithmetic. So we have both below.
I'll have more in the follow-up piece out shortly which will look at indices, flows, ownership, and some of the more subtle details of the mechanics of the listings and future flows. 

Naspers & Prosus - Another Think Part I:  About The Discount

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

Markets are showing signs of weakening at logical resistance as we anticipated in last week’s Int’l Compass - we recommend being selective in new purchases. At the same time we are seeing a number of indicators that are giving signals conducive to higher equity prices, meaning global equities may be gearing up for an eventual breakout topside resistance. In this report we highlight some attractive and actionable themes (Miners, consumer staples, and several attractive individual set ups in Thailand) along with indicators that support our overall constructive outlook.

Markets are showing signs of weakening at logical resistance as we anticipated in last week’s Int’l Compass - we recommend being selective in new purchases. At the same time we are seeing a number of indicators that are giving signals conducive to higher equity prices, meaning global equities may be gearing up for an eventual breakout topside resistance. In this report we highlight some attractive and actionable themes (Miners, consumer staples, and several attractive individual set ups in Thailand) along with indicators that support our overall constructive outlook.

U.S.Dollar Weakness A Tailwind For International Markets

Materials Analyst/Strategist, Janus Analysis

Gaius King

Materials Analyst/Strategist

Accelerating Tomorrow’s Independent Research

Boost Research

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Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/27844" target="_blank" data-smartkarma-citation="entities:27844:1">Yellow Cake PLC (YCA LN)</a> is a pure play on the uranium price</li>
<li>Spot Price $28.90/lb U3O8 &amp; L.T. Price remains $32/lb U3O8
</li>
<li>Share price trading at ~2% discount to NPV</li>
<li>Despite recent production cuts, primary &amp; secondary supplies cover world demand</li>
<li>Est. surplus ~500ktU, representing six years of global primary production</li>
<li>Global nuclear generation peaked in 2006</li>
<li>Forecast world uranium demand to decline between 25% and 40% by 2050</li>
<li>
1-year Target Price £1.98-2.02 ps NPV4% assuming $24/lb U3O8
</li>
<li>
3-year Target Price £1.57-1.77 ps NPV4% assuming $21/lb U3O</li>
</ul>



Yellow Cake PLC (YCA LN) is a pure play on the uranium price
Spot Price $28.90/lb U3O8 &amp; L.T. Price remains $32/lb U3O8

Share price trading at ~2% discount to NPV
Despite recent production cuts, primary &amp; secondary supplies cover world demand
Est. surplus ~500ktU, representing six years of global primary production
Global nuclear generation peaked in 2006
Forecast world uranium demand to decline between 25% and 40% by 2050

1-year Target Price £1.98-2.02 ps NPV4% assuming $24/lb U3O8


3-year Target Price £1.57-1.77 ps NPV4% assuming $21/lb U3O


Yellow Cake (YCA) - Great Idea, Wrong Time!

Over 25-yrs in Global Materials & Soft Commodities

Charles Spencer

Investment Conclusion: We recommend closing our long-<a href="https://www.smartkarma.com/entities/13" target="_blank" data-smartkarma-citation="entities:13:1">Rio Tinto Ltd (RIO AU)</a>/short-<a href="https://www.smartkarma.com/entities/147" target="_blank" data-smartkarma-citation="entities:147:1">Bhp Billiton (BHP AU)</a> following recent trading updates from both companies which helped to narrow the previous valuation gap we identified in our Aug-18 note: <a href="https://www.smartkarma.com/insights/us-20bn-in-lost-market-cap-looks-hard-to-justify-recommend-long-rio-short-bhp" target="_blank" data-smartkarma-citation="insights:23456">US$20bn in Lost Market Cap Looks Hard to Justify: Recommend Long Rio; Short BHP</a>

Investment Conclusion:  We recommend closing our long-Rio Tinto Ltd (RIO AU)/short-Bhp Billiton (BHP AU) following recent trading updates from both companies which helped to narrow the previous valuation gap we identified in our Aug-18 note: US$20bn in Lost Market Cap Looks Hard to Justify: Recommend Long Rio; Short BHP

RIO & BHP:  Valuation Gap Gone; Closing Long-Rio/Short-BHP

INVESTMENT VIEW: <a href="https://www.smartkarma.com/entities/147" target="_blank" data-smartkarma-citation="entities:147:1">Bhp Billiton (BHP AU)</a> shares have fallen 4% since the end of August, underperforming <a href="https://www.smartkarma.com/entities/13" target="_blank" data-smartkarma-citation="entities:13:1">Rio Tinto Ltd (RIO AU)</a> shares which have gained nearly 1%.  As such, the US$20bn in relative equity market values (EMV) we highlighted in our earlier note has begun to shrink by nearly US$6bn so far. (<a href="https://www.smartkarma.com/insights/us-20bn-in-lost-market-cap-looks-hard-to-justify-recommend-long-rio-short-bhp" target="_blank" data-smartkarma-citation="insights:23456">US$20bn in Lost Market Cap Looks Hard to Justify: Recommend Long Rio; Short BHP</a>)
All of this convergence can be explained from a narrowing in the multiple that BHP trades at versus RIO, rather than a significant change in earnings forecasts. 
We look for ~US$10-15bn more in relative gains from our Long RIO; Short BHP trade after doing further analysis on valuation multiple spreads.

INVESTMENT VIEW:  Bhp Billiton (BHP AU) shares have fallen 4% since the end of August, underperforming Rio Tinto Ltd (RIO AU) shares which have gained nearly 1%.  As such, the US$20bn in relative equity market values (EMV) we highlighted in our earlier note has begun to shrink by nearly US$6bn so far. (US$20bn in Lost Market Cap Looks Hard to Justify: Recommend Long Rio; Short BHP)
All of this convergence can be explained from a narrowing in the multiple that BHP trades at versus RIO, rather than a significant change in earnings forecasts. 
We look for ~US$10-15bn more in relative gains from our Long RIO; Short BHP trade after doing further analysis on valuation multiple spreads.

US$6bn Regained in Relative EMV; More to Go as BHPs Valuation Premium Melts...

United Kingdom

Rio Tinto plc is an international mining company. The Company has interests in mining for aluminum, borax, coal, copper, gold, iron ore, lead, silver, tin, uranium, zinc, titanium dioxide feedstock, diamonds, talc and zircon. Dually-listed company with RIO AU.

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Rio Tinto PLC (RIO LN)

Naspers & Prosus - Another Think Part I: About The Discount

On Friday 23 August 2019, Naspers (NPN SJ) shareholders approved (with the requisite majority 100% of A shares FOR, 95.51% of N Shares FOR) the...

Travis Lundy

U.S.Dollar Weakness A Tailwind For International Markets

Markets are showing signs of weakening at logical resistance as we anticipated in last week’s Int’l Compass - we recommend being selective in new...

Vermilion Research

Yellow Cake (YCA) - Great Idea, Wrong Time!

Yellow Cake PLC (YCA LN) is a pure play on the uranium price Spot Price $28.90/lb U3O8 & L.T. Price remains $32/lb U3O8 Share price trading...

Boost Research

RIO & BHP: Valuation Gap Gone; Closing Long-Rio/Short-BHP

Investment Conclusion: We recommend closing our long-Rio Tinto Ltd (RIO AU)/short-Bhp Billiton (BHP AU) following recent trading updates from both...

Charles Spencer

US$6bn Regained in Relative EMV; More to Go as BHPs Valuation Premium Melts...

INVESTMENT VIEW: Bhp Billiton (BHP AU) shares have fallen 4% since the end of August, underperforming Rio Tinto Ltd (RIO AU) shares which have...

Charles Spencer

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