Naspers & Prosus ​Spin-Off - Remain a Buyer at the Reference Price - Updated Implied Discount Grid

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European Event-Driven Analyst

Patryk Basiewicz

Event-Driven

I build on work of my colleagues <a href="https://www.smartkarma.com/profiles/sumeet-singh" target="_blank" rel="noopener">Sumeet Singh, </a><a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" rel="noopener">David Blennerhassett</a> and  <a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" rel="noopener">Travis Lundy,</a> who not only discussed the details of the <a href="https://www.smartkarma.com/entities/prosus-nv" target="_blank" rel="noopener">Prosus (PRX NA)</a> listing, but also offer tangible trading strategies around the event. I aim to provide a fundamental and analytical work that builds on their results. My SOTP valuation of Prosus leads to a c. EUR142bn EV. Subsequently, I analyse what this valuation implies for the profitability of purchasing one <a href="https://www.smartkarma.com/entities/naspers-ltd" target="_blank" rel="noopener">Naspers (NPN SJ)</a> N share, receiving one Prosus share and selling those at unchanged fair value. The profitability of this trade significantly depends on the expected discount of Prosus to its NAV and discount of Naspers to Prosus. By my calculations and my assumptions with regards to the two discounts imply the trade remains profitable.To support my concluson, I discuss certain quantitative and qualitative evidence that supports narrowing in the Prosus discount and sustained discount of Naspers to its NAV. But I also support the view that the discount in Prosus should narrow in the medium term.

I build on work of my colleagues Sumeet Singh, David Blennerhassett and  Travis Lundy, who not only discussed the details of the Prosus (PRX NA) listing, but also offer tangible trading strategies around the event. I aim to provide a fundamental and analytical work that builds on their results. My SOTP valuation of Prosus leads to a c. EUR142bn EV. Subsequently, I analyse what this valuation implies for the profitability of purchasing one Naspers (NPN SJ) N share, receiving one Prosus share and selling those at unchanged fair value. The profitability of this trade significantly depends on the expected discount of Prosus to its NAV and discount of Naspers to Prosus. By my calculations and my assumptions with regards to the two discounts imply the trade remains profitable.To support my concluson, I discuss certain quantitative and qualitative evidence that supports narrowing in the Prosus discount and sustained discount of Naspers to its NAV. But I also support the view that the discount in Prosus should narrow in the medium term.  

Naspers/Prosus (NPN SJ / PRX NA) - Analysis of the Two Discounts

Prosus NV

Naspers/Prosus (NPN SJ / PRX NA) - Analysis of the Two Discounts