A Shady South African Company Owns 29% of Tencent

In this video we explain why Naspers and Prosus both trade at a massive discount to their 29% stake in Chinese tech giant Tencent. the reason has to do with their arcane governance structure in which insiders control the majority of voting control through their class A super voting shares.
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[@hersenskim]

South African here. Your Historical research and insights into companies are really, really good!

[@MrChefT]

Honestly, how much forensic accountants do you have on staff?! These deep dives go hard.

[@jeremylawson6648]

lol this is great i’ve got nothing to add i just love the comment.

[@samsonsoturian6013]

It's just a matter of doing the work. For convoluted reasons I was looking into a cold case of market manipulation and found two suspects (or rather I found their obituaries).

[@kir44d14]

"If you get excited for this stuff you are too f deep" 1:2 Benjamin (youtuber) Book of Revelation.

[@mgibn07]

The dive is not even that deep tho. To Investors in South Africa, Naspers situation is well understood and to be honest, nothing new has been learned here.

[@UnknownUnknown-hg7xg]

@@mgibn07Are you a Nigerian prince by any chance? Are you still working on that inheritance from Naspers?

[@zee7922]

South African here... Naspers accounts for about 40% of the Sourh African Stock Exchange plus that Prosus/Naspers exchange meant that shareholders were double taxed😵😵And were basically forced to swap shares whether they wanted to or not.

[@victoramogu3708]

Woah 40%... that sounds like a disaster waiting to happen. Plus their financial gimmicks too... hmm

[@zee7922]

@@alexanderhamilton7610 Don't worry been a loyal subscriber please do more videos on companies that are based in 3rd world countries especially in Africa as well as in Europe. You're pretty much one of the few that break it down in a manner I understand

[@zee7922]

@@victoramogu3708 Yep, we're all pretty much waiting for a Steinhoff Part 2 to happen🥲😵

[@sakhilemaseko3994]

@@alexanderhamilton7610 spam bot

[@alexandermcqueen9351]

@@sakhilemaseko3994 shut up ur dirty mouth, how did you know it's a spam bot, I have has joined their VIP group over two years now, and it was a fabulous decision I have ever made in my life it really work well with good strategies

[@gngan]

Naspers bought Tencent shares from the richest family in HK (Lee Ka Shing) before Tencent even is known to the world. I also helped one of the Naspees executive relocate to Hong Kong as well.

[@Dwightstjohn-fo8ki]

Lee Kai Shing (and his sons). We basically GAVE him False Creek after Expo 86 in Vancouver, BC and this started to high rise condo transformation of Vancouver. Best kick in the ass our butts ever deserved.

[@willy9901]

@@Dwightstjohn-fo8ki ka-ching!

[@PaulBernard365]

According to your own research revealed in this video, the discount to the market should be $0.00 since there is no value to any outside investor; no dividends, unbridled dilution, opaque governance. Seems more like a Family Office than a public company. Great video, thank you!

[@hello-friend990]

I studied finance in South Africa in 2008 and back then the Tencent discount was a hot topic in financial publications. It was seen as an opportunity to invest in Naspers you couldn't miss out on due to the enormous future gains. Unsurprisingly, they didn't live up to the hype. It all seemed too good to be true

[@liyexiang666]

so people won't even make money had they buy it back in 08?

[@diveshsood]

I've heard about most of the startups shown in the video. I didn't know Naspers had its hand on them. Appreciate the video.

[@senamazubane5255]

As a South African I can say this is one of the most complex videos I’ve seen from you 😭 what is Naspers up to

[@otis3744]

naspers is just undervalued thats all, a lot of south african companies are undervalued also the south african rand is also undervalued

[@MobThe24]

abelungu mtase!

[@dailyfx1415]

@@otis3744 nah naspers literally owns everything in south Africa

[@naninimzamane3186]

@@MobThe24 😂

[@siphomahlangu5531]

@@dailyfx1415 Bro, I just found out about it, I did not know anything about Naspers till I had an interest in the stock market this year, it is a great company which is properly managed, I recently bought it shares including prosus with a little money that I have

[@HEEHEEBOII]

"A shady SA company owns 29% of Tencent", so does Softbank and a bunch of other US investment banks.

[@j4genius961]

Exactly, and they're just as shady if not even more🤦🏿‍♂️

[@HEEHEEBOII]

@@j4genius961 exactly. lol no flame to some of the comments below me, people appears to have their mind blown though haha!

[@tomlxyz]

How's softbank shady?

[@j4genius961]

@@tomlxyz They deal with the Saudis,one of the most oppressive regimes on earth, they invested heavily in Wework, one the biggest frauds of our century, etc etc etc, banks are gonna bank immaright?

[@ProfAzimov]

​@@tomlxyz Unreliable valuation estimates

[@libhongolanga1010]

South African subscriber here working in the asset management industry. Did not expect to ever see one of our publicly listed entities covered on this channel. Naspers is the cornerstone of the majority of stock portfolios in the country. You describing it as "uninvestable" is the total opposite of the market reality unfortunately :(

[@samsonsoturian6013]

The whole country is uninvestable, frankly.

[@libhongolanga1010]

@@samsonsoturian6013 that's a bit of an exaggeration at the least

[@peach7469]

Much more likely than an Ethiopian company.

[@samsonsoturian6013]

@@peach7469 from what I see they just opened a stock exchange and I found no Ethiopian based publicly traded company anywhere

[@josetheman239]

My sentiment exactly. Koos is a legend here, nota shady dude.

[@nieldekock6898]

Good video. However, I am a South African and a Naspers and Proses shareholder, and I it one of the biggest and best investment a South African could have bought in recent years.I have seen its share price go from 6$ in the early 2000's to more than 250$ and still got business like Multichoice and a printing company. Your history is a bit off as its was Jan Smits that started National press and not AH Marais (he was a rich landowner that donated land to start the University of Stellenbosch).

[@epickabelo]

In 2019, the current CEO of Naspers, Rob Van Dijk was paid over $100 Million in salary for executing that spinning off of the intl. assets into Prosus to congratulate him. It turned out to be a massive disaster. Also, I remember one of my professors telling me that if Prosus were to sell the Tencent shares, they would accrue taxes in excess of over $40 Bn to the SA and HK governments.

[@zuyantee2052]

I guess this means that the company owns Threecent... ...I'll show myself out.

[@hersenskim]

Hahaha! Nice

[@hello-friend990]

Come back sir, you've won KZbin for the day

[@brownmirror]

a year later and damnn😄 still the best

[@samuel.andermatt]

7:50 "The value of the stock is the discounted value of its future dividends", if this was true then Berkshaire Hathaway or Alphabet would be worthless. But, yes if it never returns capital and is never aquired than it would be worthless.

[@vinniechan]

The other way you can get cashflow is by selling the share You can gauge the value of the stock by net asset value per share (that is if you liquidate the company today how much money you can get back from the net asset)

[@hpdpco6634]

This is a scam. My mom always told me, the more complicated a business was, the more likely it was a scam. That's what scammers do. True legit and honest businessmen make their businesses as clear and as simple as possible so investors can understand.

[@generaluser]

True.

[@justinbeghly1435]

That’s some first level thinking

[@rhythmandacoustics]

China crackdown, shady Chairman, conflicting ineterest, complicated structure that can potentially hide debts and so on. Hmmmm what could occur.

[@senamazubane5255]

Enron 😅

[@josetheman239]

This is very complicated. I would like to point out though that people in South Africa love Naspers we all use at least 1 of their subsidiaries on a regular basis and I have seen articles written about why investors punish a company that is doing so well. Maybe this is why.

[@samsonsoturian6013]

There's nothing in South Africa worth investing in.

[@gamejunkie6519]

there are monopolies in south africa,we don't use it because we love it

[@josetheman239]

@@samsonsoturian6013 Now that's a lie

[@josetheman239]

@@gamejunkie6519 I meant investors. Investors love Naspers because of their successful investments normal people do not even know what Naspers is so your statement is irrelevant.

[@rdesousa8955]

@@samsonsoturian6013 What about contents of House Luthuli? *stirs pot*

[@stefanvasilev8948]

Great analysis, thank you!

[@SonglyWryt]

This just shows how much money there is in South Africa has.

[@ChristopherdeVilliers]

Ah yes, everything in SA is shady, especially when we don't have electricity...

[@mpilohlongwana4819]

Lol, I see what you did there

[@michaelochieng8887]

Great video. Very insightful. Keep it up

[@MindandQiR1]

Let me rewatch this video - so complicated! But thanks so much though!

[@marilynlucas5128]

Koos Bekker is my friend. He's incredibly wealthy

[@Growth-Value]

Idk why you see this as such a negative 🤔 Its literally a company that invests in start up companies that got a home run with tencent You’re suggesting they should just stop investing and liquidate? The reason the ceo shouldnt give up a controlling stake is to prevent some bloke to come in and sell off all its assets and shut down the company Sure, shareholders might benefit in the short term but how about long term? Why sell tencent, one of the top 2 companies in a still growing china? And good thing that naspers/prosus invest in start ups, if they were idle, it’d be such a waste! Let them use their expertise is investing in startups to bloom and make naspers a giant like berkshire is. Buying and holding is the best you can do for a quality business like tencent 👍🏻

[@einfelder8262]

Remind me to never accept investment advice from a blind man.

[@genesismachine]

Step 1: Sell $100M of Tencent shares Step 2: Use cash from that to buy back shares of Prosus Step 3a: Assuming buying back shares of Prosus increases the stock price, then stop Prosus buybacks and start buying back shares of Tencent. Result is Prosus share price is much higher, and Tencent position is more or less unchanged. Step 3b: Assuming buying back shares of Prosus does not increase the stock price, then selling $100M of Tencent then using proceeds to buy back 'equal' amount of Prosus shares only would cost $43M due to huge discount. So buy back $100M of Prosus shares. Step 4: Repeat all this as much as necessary to either A) Succeed in taking company private (pretty much impossible), or B) Succeed in making share price discount much less. There is no scenario where this ends up not creating value for Prosus shareholders in very quick fashion. The fact that they don't want to do this shows management's goal is not to increase Prosus share price, but to just build an empire. Why would you invest in a company like that?

[@einfelder8262]

@@genesismachine Exactly. Just like many other companies, never return anything to shareholders, just sit on mountains of cash and other assets. The only way to benefit is by trading the shares - the most stupid way of trying to make money out of a company drowning in cash, especially when NAV is way above share price. Just another high class fraud sucking in even sophisticated investors like pension funds.

[@13gan]

Technically, the Tencent share can't be sold. With the PRC govt restriction on foreign investor from owning chinese stock directly and everything that been happening in China, those stock are in a sort of limbo.

[@einfelder8262]

@@13gan I'm pretty sure that if I wanted to invest a few hundred million US$ into the chinese market, china would grab it gleefully. My problem would be, I'd never get it back. Donation to the CCP.

[@harmhoeks5996]

Assuming your calculations are correct (which seems they are). The market must also have a really big negative view on those other startups, as cash burning machines. Another argument is that the Amsterdam stock exchange is less overvalued than the Americans (US = The World in their minds). The rest of the world invests in America, Americans don't invest in the rest of the world. The structure was perhaps created to protect against outside influences, which I can understand. And perhaps that does attribute to the largest portion of the discount.

[@wrednax8594]

Naspers has diamond hands w/ Tencent

[@vusimahlobo5378]

The J in Johannesburg is the same J found in James, John, job and so on...

[@BRYDN_NATHAN]

Thank you. 0:08:01 Its nothing like gold. 👍

[@ashlinr38]

I really enjoy your videos, however when scrolling through the comments I'm disturbed by the various messages from ADMIN (using your logo) giving out a phone number for presumably financial or similar advice. I'm not sure if this is a legitimately from WSM or some scammed leveraging your name

[@wallstreetmillennial]

It’s not me, impersonation scams r very common on youtube. I try my best to ban them but there are so many.

[@ashlinr38]

@@wallstreetmillennial thanks, it's such a pity that they take advantage of the tremendous effort that you take in making your videos

[@kaizen1723]

a "Shady South African Company" is like saying a round circle. Its pretty insane how South Africa has gone from the crown jewel of Africa to the laughing stock.

[@romeo4rmza381]

Bruh

[@PandamoniumZA]

brrruuuh

[@nlocnil3602]

When was it a crown jewel? And how is it a laughing stock ? You mean the richest country in the entire continent of Africa is a laughing stock?

[@bawiso]

​@@nlocnil3602yes

[@riadirige7804]

Glad you brought this to our attention

[@benp9442]

It is nice to see one of my largest Holdings (Prosus) on your channel :) (I think it is around 16% down hahaha)

[@ashlinr38]

Same here Ben, bought a bunch of them in April at a high and waiting for an upside, hopefully break even soon :)

[@benp9442]

@@ashlinr38 also brought around that time. Lowering my price ever since

[@drscopeify]

For real?

[@benp9442]

@@drscopeify sold it all last week after restructuring my portfolio

[@sang3Eta]

For those that do not understand why it's univestable to institutional investors, its because they hold over 70% of the voting rights and can take the company private at a moments notice. You could get caught out holding a loss and being forced to sell.

[@liyexiang666]

70% is enough to do thay? what is the minimum requirement?

[@sang3Eta]

@@liyexiang666 it varies by stock exchange and country but in the UK someone with 75% can force the sale of the final 25% to take it private.

[@liyexiang666]

@@sang3Eta at any price they want or at the on-going market price?

[@sang3Eta]

@@liyexiang666 I think it's 25% above current market price in the UK but they do it at the bottom of the market cycle so if you have been averaging down from the peak you can lose money.

[@liyexiang666]

@@sang3Eta thats dirty mate

[@wesleyolifant3665]

Prosus stock price goes up, koos makes more money. Share holders well... hmmm...

[@ppkgaming210]

Screw Naspers and Prosus, I'm getting rid of them asap.

[@hylacinerea970]

watching this caused me to sweat uncontrollably out of confusion

[@icetrip2417]

Didn't know

[@smirreslordling6486]

As a German I suspect that the wrong M-net logo was shown. The one presented is the logo of a regional telecom provider in the Munich region (Therefore M-net).

[@SollyNhlapo]

I hope this does not end up like Steinhoff even though this isn’t exactly like the Steinhoff situation but South Africans know what I mean

[@friednoodlee6599]

The same problem appear in a lot of emerging market corporation. They could have a good operational value but because of conglomeration and unwillingness to split the diff with public investor, most of their price become "undervalued" Really its just a matter of conflict of interest

[@kikolatulipe]

Nice job

[@ElLotdog]

“In theory if they lock the assets within the company forever and never pay a significant dividend then you could say the stock has 0 value” by that logic Berkshire Hathaway is worth $0 too

[@FaustsKanaal]

I mean it is. Its at this point nothing more than a glorified ETF for the companies they hold. Just invest in the shares directly if you want the value. I mean there is a Buffet premium on Berkshire but other than that it has no added value.

[@madamec.j7363]

And at the.end of the he day ... they can't take it with them ....now can they

[@ppkgaming210]

"Meh-ra-us" 🤣🤣

[@mmathulosejake]

Oh, first of all you pronounce the J in Johannesburg as "J" not "Y". The only reason to say it with a "Y" would be if your were referring to it in Afrikaans, which would require you to pronounce the rest of the word in Afrikaans, which wasn't the case. Secondly, great video. Need at least a 2hour long form video on the company. Didn't know most of this information.

[@HighestIQ]

China ain't got nothing on this share structure and use of shell companies.

[@lukealadeen7836]

Koos is pronounced as "Koowes"

[@CBD-Life-South-Africa]

Wrong, k double o then s no w

[@lukealadeen7836]

@@CBD-Life-South-Africa you know that spelling and pronunciation are 2 different things right?

[@willy9901]

Too much Koo beans = Koos

[@csours]

There's a bot talking to itself in these comments.

[@samsonsoturian6013]

Yeah, there's a lot of those these days.

[@ETS186]

Not a bot man. Scammers.

[@adamvalt6609]

@@ETS186 yeah, bot from scammers

[@masterofgarden3472]

Shady company, don't touch it with a ten foot pole.

[@WorldinRooView]

I guess the real question is, are you younger than their CEO, cause you can buy and wait for them to die (with the hopes that causes them to change to be more investor friendly)?

[@Swordhero111]

Not waiting 20 years for a 53% arbitrage

[@asimqazi1943]

Absolutely

[@MyCUTboyz]

Wow

[@r.w3440]

I did not invest in prosus, as I could not trust the owners, nor could do Imanage it doing better than original te cent stock...

[@gneruinseruihnutshnu]

Koos is 70 years old. Who will control the company once Koos dies and what will be his motivations?

[@audience7264]

Rugpull imminent

[@WoodrowsRandomReviews]

South African here. Informative video, but your pronunciation of names is grating to the ear.

[@UnknownUnknown-hg7xg]

You’re on an American app created for and by majority Americans….you can go to your South African version of KZbin for better pronunciations.

[@Monkechnology]

@@UnknownUnknown-hg7xg "haha speak american or gtfo from my internetz"

[@MightyAfricans]

@@UnknownUnknown-hg7xg 😂😂

[@algreen1]

Holy shit, dude. WHAT is this company

[@justinbeghly1435]

You got that wrong

[@garymiedema642]

Marias is pronounced Mah-RAY.

[@lighthousesaunders7242]

Actually, it's Muh rare.

[@zorintoto1167]

Nothing shady about softbank also owns stakes in tencent

[@aidanabregov1412]

proSUS

[@JasmineJu]

pro sus

[@kentondragon9263]

Shady? 🤣🤣🤣...You Funny😄..have you read Pandora papers?🤔

[@Allen_Leigh_Canada]

I honestly can't follow what said in this video.

[@glennboyd939]

Anyone buying Chinese social media shares is a fool about to part with his money.

[@magiccards-ou9cq]

FUD much?

[@mariusvanc]

"A Shady South African Company THINKS It Owns 29% of Tencent"

[@BillCarrIpswich]

Given the knowledge that Naspers won't sell their Tencent shares, doesn't that create scarcity for those remaining on the open market? If Naspers were to sell their holdings in Tencent, the Tencent share price might fall to a level that wipes out the discount. I.e the Naspers price is actually a better estimate of the true market value of a Tencent share.

[@samshongwe]

Ah yes, my fellow South Africans have arrived in the comments section 😄. Keep cranking out those videos.

[@mgibn07]

Nah mate you don't understand. Yes, the discount is a problem but the control structure is to protect the company from international takeover possibilities. That's why the emphasis is on control and not economic benefits. Your dive into the history is surface-level at best because once you understand the original purpose of Naspers, you will then understand why South African ownership is important 👌

[@realdudevision2746]

The NAV discount is not a problem. It just means investors are using discounted cash flow from expected dividends to value the business.

[@TheAcharyaa]

I’m sorry but this video is incredibly one-sided and the comment section is mainly full of ignorant Americans. Your whole video thesis seems to be that Naspers could return value to shareholders by selling their Tencent stake. This is ridiculous. The whole reason Naspers has value is BECAUSE they never sold tencent! Would you tell Berkshire to sell their Apple stake or Softbank Alibaba? Koos literally made one of (if not the) greatest investment decisions of all time and even more impressively held for 20+ years. Of course their are issues with the company there are plenty of value investors like Monish Pabrai, Rob Vinall etc who believe in them and your one-sided view comes off as very biased.

[@vinniechan]

crazy

[@ahndeux]

Now explain how the Nigerian scam works...

[@willy9901]

Which one?

[@meluk6991]

Where to begin?

[@joeybiden2682]

nice

[@bongarozani272]

Naspers is not shaddy at all

[@philipbanda6637]

It is very Shady

[@ProfAzimov]

It is not shaddy, it is shady

[@tirthb]

Bekker, retire please 😃

[@justinbeghly1384]

Shady = I don't understand

[@heyitsnemo]

Third.

[@Ninjasrbritish]

First baby.

[@TheRinzler2]

second.

[@minecraftdonebig]

wtf lol

[@AW-tc4hy]

Tencent is overpriced

[@germpetiov8622]

Another greedy money launderer, this world will self-destruct from greed!