The Prosus / Tencent Stocks Discount Situation

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[@benixmaximus]

This was a fantastic update. It would be great to get an Alibaba update as well 🙏🙏🙏

[@iwanmuzaki8049]

Sven is scarred for life

[@Tdfw13dmnt]

I believe Vennabit Token will go 200x after launch on Binance.

[@ManforSomeMarkets]

Seems like a good reason for the discount to exist: -No real pressure on Prosus management to liquidate their Tencent holdings -As you said, the discount has existed for years. Buybacks clearly are not as effective as other distributions. -Prosus would lose much of its book value as it distributed Tencent or buy back shares at any meaningful speed. The core business can’t sustain their cash flow needs. -Would Prosus distribute Tencent in a European, American OTC or the HK shares? -What type of borrow could traders get in those OTC and HK markets if they wanted to arb the discount? -Managing FX risk between HKD/EUR (technically USD/EUR because of the peg). I feel like this is a Yahoo/SoftBank scenario that management want to keep their China tech stock as a piggy bank for the core business. It takes a lot of capital to compel them otherwise, and I don’t think many activists will want to play in the Dutch market.

[@Value-Investing]

excellent summary!

[@Sykesy111]

Hi Sven, what are your thoughs on Flow Traders? It seems like high interest rates environment does not fit them and they will probably have a loss for Q3, which is also the reason for their big recent drop. Thy

[@fredbennett5285]

Thanks for analysis!

[@mathewwilson9776]

If there was an obvious arbitrage, it would have disappeared long ago. Investors who want to own Tencent may simply want to own Tencent, without any garbage attached. People just can't help but make investing unnecessarily complicated.

[@Value-Investing]

good point!

[@luciobarbato1461]

Maybe this times make sense to invest on company with low dept?

[@user-eb7jg6eh2b]

My favorite type of video, very informative! Talking about China, JD's price has hit 29. In the meanwhile their financials are recovering, what is there I'm missing? It's sitting at a 15 P/E while Alibaba and Tencent have slightly recovered.

[@Value-Investing]

thanks for sharing, we'll see if I can find the time to update!

[@christophenour]

Great video! I suspect the discount with Tencent will never disappear. Basically Prosus is 75% Tencent 25% speculative. I bought some Prosus shares disregarding the 25% bets, you very well covered the business and its layers.

[@Value-Investing]

thanks!

[@samuelbarnes9243]

Have you considered the structure risk with prosus and naspers? Sure it looks good when you look at just the numbers, but shareholders basically have no voting rights in either of those companies.. so how are the incentives between shareholders and the company insiders that hold all the voting rights well aligned? This is a HUGE risk.

[@Retired.at.33]

The discount is so big that actually selling Tencent to buy prosus they are increasing not only the Nav per share, but even the Tencent share per share! So it’s absolutely beneficial to shareholder

[@Value-Investing]

yes, we will see how it will evolve, but it has taken some time!

[@Simontdrhd]

No. If you own tencent, you own it. If you own Prosus then you don’t

[@maxjames00077]

@@Simontdrhd No, if you own Prosus, you own Tencent :) If you own a company that owns something, you own it.

[@dmm927]

What do you think about the price or tencent itself with the pressure of prosus selling such a large stake over time?

[@Artur960426]

Can you look up Wittchen company? It is down 30% down in last month and -45% since may. Wittchen is leather goods manufacturer and seller. I think it is one of better listed companies in Poland. Steady grower, current PE 6,3 and dividend 13%. Debt seems to be not bad covered. It could at least be oversold, I think. If you could cover this or at least look up, if it is remotely interesting. I don't know, if I at least look in good direction with this company. Regards.

[@kilbill5979]

Great update on understanding operating business and its holding company. Thx Sven!

[@Value-Investing]

thanks!

[@Zanzabar5]

Any update on Rubis? It's at a considerably bigger "discount" than your last video about it.

[@NipponTAB]

Well, the numbers of Rubis are still going well so if you loved it at 24 , you should love it even more at 21 :). In the other hand, if you bought it at 24 just because Sven talked about it, you actually make extremely bad decision and you should rethink your way to invest. I started to invest in Rubis with my own analysis around 21 before Sven talks about it. I saw his conclusions about it, it was sweet, it was coming to the same point as mine. I kept my DCA on Rubis and have been adding more at 24, 23 and now around 21 again. I don't really see which update you would want him to do, Rubis is a boring company moving slowly. It won't change in a couple of months. However, it is a dividend aristocrate, with low valorisation and it is still growing. Just for that, it says a lot. The price of the stock is actually just based on the mood of the market, it means absolutely nothing. You are rewarded with an 8% dividend increasing every single year waiting for the market to change his mood.

[@Carlos.Damiao]

OLX Autos was sold, for your information.

[@florestores]

Thanks for your content...Could you make a Carl Zeiss Mediatec AG stock analysis...it's about -60% from it's peak in 2021.

[@Value-Investing]

thanks for suggesting!

[@unktzor]

Awesome video Sven!

[@Value-Investing]

Glad you enjoyed it

[@_jrrash]

Ebay deal with Vennabit Token is completed. Presale launches tonight. Cant wait to invest.. Ecommerce and crypto are both part of the broader trend of digitalization and the shift towards online activities.

[@fingerprint1991]

Hey Sven. I believes a value investment can be Stora Enso a commodity. Company. The current market cap = the value of the forest they own. Everything else is a bonus. I am curious to hear your opinion

[@Value-Investing]

You think the value of the forest is fixed?

[@fingerprint1991]

@@Value-Investing no, it is a commodity which at the moment is low however it can always get lower on a recession.

[@ahmedxh]

Isn’t buying and selling marketable securities and private equity part of the business? If yes, why would we disregard that as income? 2) Are you Accounting for the value of their holdings (private, and public) in your evaluation? Thank you very much I enjoy watching you and I look up to you

[@Value-Investing]

Because it is not operating profits and then you would count things twice

[@jonnes__4657]

Tencent and Alibaba.... 👍 .

[@michaelyang6683]

Don’t forget Tencent is buying back their own stock on the HKEx, 1.3 million shares almost every other day.

[@nataliam895]

Really???

[@danienishanov738]

Thank u so much !! was very much looking forward for this video. how come prosus isnt paying capital gains tax for selling 10cent? sorry still a bit confused, what is the total market cap? is it 65B euro (27.92 share price)?

[@Value-Investing]

there is something with those taxes, up to a certain limit, but after they will have to pay, don't ask me when?

[@maxjames00077]

@@Value-Investing Did you ever find out when they will have to pay taxes? Doesn't make sense to keep doing buybacks when this becomes a fact no?

[@maxjames00077]

@danienishanov738 did you ever find out whether prosus pay tax?

[@boratsmagadijev940]

I would rather buy Tencent directly. Great video Sven!

[@Value-Investing]

Fair enough!

[@philippusparacelsus4136]

Great video. I like to keep it as simple/stupid as possible: I just buy Tencent directly in hk, because I like the business and I think it's fair value. Prosus just adds several layers to an already indirect ownership

[@pornstarpat]

I would watch the whole video!

[@philippusparacelsus4136]

@@pornstarpat I did, so what? I disagree with Sven, I prefer to own directly Tencent

[@simonebruschi9793]

So now 50% discount?

[@johnl.7754]

Softbank has a similar “value” setup as Tencent don’t know if it is better or worse than it.

[@sheanathan3566]

Thanks Sven Can you do an update on Baba including current risks This would be great Nathan

[@Value-Investing]

same as always!

[@riccardosanna3907]

Ciao Sven, grazie per il video. I have a position in tencent; if i have understood well, Is a good move to sell tencent and buy Prosus? Grazie mille, ti seguo sempre 💪

[@Value-Investing]

I think I said it in the video! Hard to know where the discount will go!

[@patrickzingg8657]

Good video Sven... a bit like in the old days of your chanel!

[@Value-Investing]

that is the plan:-)

[@NormerDormer]

What about pershing square holdings at a 35% discount? They've been aggressively buying back shares over the past year or so

[@MJHarris93]

He made a video on that. A log of the NAV discount is just Bill Ackman's fees

[@Value-Investing]

yep, agree with MJHarris93:-)

[@heneliezer1421]

I Dont get their 60b + 48b valuation of their investments, It should be a lot higher, I actually calculated over 250b in investments. 5% of tesla is around 40b by itself 100% of riot games is probably 40-60 m ( comparing to blizzard for example) and 40% of epic should be around 25b And they have hundreds of other investments, like in reddit, nio, supercell, snapchat etc I feel like they are down playing their investment portfolio

[@Value-Investing]

thanks for sharing!

[@maxjames00077]

It says ''excluding subsidiaries''. Even when owning 40% of a company they can control it by having 50% or more of the voting shares. Did you ever get new info on this? I'm thinking about buying shares in Tencent too.

[@heneliezer1421]

@@maxjames00077 Im still a holder , believing in the company, less in the chinese economy tho

[@user-eh4wx2qr6k]

Vennabit Token and Ebay signed a partnership. It will blow up once it hits mainstream..

[@braytoncornell9678]

It is always good to have a financial plan. I work with a professional planner and fixed-income strategist in USA. The fixed income portion of your portfolio won't simply serve as a buffer to the volatility of the equity portion of your portfolio, but will provide legitimate income.

[@hillarybriggs2561]

Very true, people downplay planners role, until burnt by their mistakes. I remember just after my layoff early 2020 amidst covid outbreak, I needed to stay afloat, hence researched for license-fiduciary advisors. Thankfully, I came across someone of practical knowledge, and decades of experience, I liquidated 200k of 325k from my 401k it has yield nearly 1M after subsequent investments so far.

[@mathijswouter3301]

I've shuffled through a few experts in the past, but settled with LUCY ROSE CARTER. The strategy she use is recession-proof, more specifically profit-oriented , and most likely, you'd find her basic info on the net, she's a renowned advisor.

[@andrefontaine3058]

How can I join in? I will be happy growing my money while giving a few of it away to charity, giving back is as good as receiving.

[@bernardlynch5226]

LUCY ROSE CARTER is the CFP responsible for my portfolio success, the lady has a private client base you can confirm her yourself on the internet, regulation an all.

[@ericbergman7546]

I'm a beneficiary actually of LUCY ROSE CARTER. I've been able to scale from $220k to $880k, under her supervision and accountability. I never knew I would be so lucky investing with her.

[@johnl.7754]

Wonder if Prosus still has any risks associated with its Parent Company based in South Africa or is it free of that risk now? I used to follow it but not for a few years now.

[@jointy]

The managers are just idiots. No clue what to do with all the money. They bought food delivery companies and wonder why they burn cash. If they had just paid a dividend, using the Tencent dividend, instead of trying to invest it shareholders would have been better off. Better yet, used the Tencent dividend to buy back their own shares.

[@jc5688]

Thanks for the update Sven. I'm not sure if this is how you pronounce fintech in your country but in the US, phoenteically it's pronounced fin-teck, not fin-tetch.

[@Value-Investing]

yes, you are right :-))

[@lorenzosadino6011]

the problem dear, Sven is that it's 5 years that is at a discount from what you say.

[@Value-Investing]

yes, the discount is there and going nowhere!

[@shakeelabdal-karim6488]

Thanks, Sven! we need to keep this one a secret from the PLTR and PayPal bros!

[@michaelbird6741]

Didn’t management at Prosus announce they were going to continue to sell down the Tencent stake to buyback shares AND invest in their own portfolio of companies. Most of which appear to be second class money losing tech companies. I would assign negative value to their current portfolio as it’s a drag on the tencent position. Also factor in that any more spins from Tencent have not been passed through to Prosus share holders but kept in Prosus. Is 40% a justified discount? I would say maybe with managements poor capital allocation plans.

[@Value-Investing]

for now except for Tencent, they have not been good!

[@michaelbird6741]

Stack Overflow acquired by Prosus for $1.8 billion

[@derunderdog1]

I have Naspers shares. What do you think about the Stock of Naspers and the company?

[@Value-Investing]

Isn't it the same now?

[@aldolabuonora]

Would it be a good idea to make a arbitraje pair operation? Like to buy prosus and sell tencent betting that the gap gets smaller

[@leosali8845]

You have to pay interest in Tencent's short

[@Value-Investing]

ah, not that easy I think!

[@jointy]

Avoid this purchase, the discount is justified. Incompetent management. I made a nice double buying the bottom, sold to load up on more Alibaba.

[@mutantmass5334]

what do u think about BABA ? 1/3 MAket Cap in cash, good ER.... Why its so low too ? ^^ Bag holder here :( since IPO dead money ^^

[@Value-Investing]

that is investing! You can't always make money when you wish so...

[@mutantmass5334]

@@Value-Investing a lot of patience 😁 too

[@aldolabuonora]

Is very different to own tencent that to own a company that owns another company that owns tencent The gap may be justified

[@Value-Investing]

Yes, that is the conclusion!

[@TuanAnhNguyen-ie4nr]

What's the ticker of this stock?

[@Value-Investing]

Check on Prosus investor relations for what is best for you! Anyway: Amsterda: Prosus

[@hydranth]

Yes, there si a discount. But do you wanna sell Tencent and keep the "shit" that is the remaining part of Prosus?

[@Value-Investing]

that is a good question, the discount has been there and might be there, but might also close... you never know!

[@jim83213]

I am buying Alibaba starting a week ago and I am also seeking confirmation bias, please do an update.

[@Value-Investing]

only on research platform :-(

[@ondrejmach6997]

I am Prosus Holder... The question is not when the discount closes... It will never close... The thesis is to grow NAV/share through dicounted buybacks for as long as possible... Hopefully I am gonna be the person to hold the last remaining share worth bilions.

[@Value-Investing]

interesting idea, but if you sell Tencent and buy something that has no value, there results won't be good!

[@arashfirenze4495]

Where to check the discount ratio?

[@maxjames00077]

Prosus their website

[@Value-Investing]

you can check the website, but if you agree with their valuation!

[@frossato]

Proper investigative video. You are the Coffezilla from the corporations.

[@Value-Investing]

:-)

[@samuelbarnes9243]

Its not as simple as "consider prosus if you want to hold tencent at a discount." There governance risk considerations there with both prosus and naspers. Over 50% of the voting rights for prosus is controlled by Naspers and over 50% of Naspers voting rights are held by company insiders that hold very few actual shares in the company.

[@Value-Investing]

thanks for sharing!

[@aristark559]

but why is the discount between prosus and tencent even there?

[@Value-Investing]

because of taxes, Prosus management investments etc...

[@aristark559]

@@Value-Investing you got a link where one can read about it?

[@_VlCTOR_]

is it smart to sell tencent shares when they are cheap to buy back your own shares ?

[@KayVerbruggen]

The valuation for Tencent doesn't matter. Here's a quick calculation with some easy numbers. Imagine Prosus owns 10 shares of Tencent that are all 200 USD, and there are 10 shares of Prosus which are all 100 USD. This means there are 10 Prosus shareholders that each own 1 share of Tencent indirectly. Now Prosus sells one share of Tencent, they get 200 USD and can buyback 2 of their own shares. Now Prosus owns 9 Tencent shares, accross 8 shareholders. So now every Prosus shareholder indirectly owns 9/8 = 1.125 Tencent shares. So as a shareholder you actually end up with more Tencent shares, so if Tencent stock is undervalued this is still good for you, because you now own more undervalued shares.

[@samyueldanyo8679]

​@@KayVerbruggen Question is how much taxes, fees, etc are payed in the process but yeah, if one believes tencent is undervalued this should in general be neutral to good.

[@_VlCTOR_]

@@KayVerbruggen my concern is at one point they will sell significant amount of tencent stake and will remain with nothing

[@jdr4674]

No point in holding such a security if it doesn't compensate you for the risk (at least 5% dividends)

[@mathewwilson9776]

@@KayVerbruggenThe Prosus shareholders also own the money-losing garbage that comes with the Tencent shares. If the arbitrage hasn't dissipated, there may not be an arbitrage at all and the rational Tencent investors that still exist may simply want to own Tencent shares directly without any garbage attached to them.

[@if1389]

wieso ist der Prosus CEO so plötzlich zurückgetreten?

[@Value-Investing]

Ich weis nicht! Kain comment in die berichte aus Prosus!

[@Politik-mit-Kopf]

It’s not fintetsh. It’s fintech. Like technology. Not like tetshnology.

[@ayandidrumer4499]

I believe Vennabit Token will be a game changer.

[@paolo3349]

Prosus is a tricky company to value due to its unique shareholder structure, which disadvantages investors outside of Naspers. Prosus continues to struggle with profitability, with none of its businesses generating noteworthy bottom-line profit, and its value is still heavily dependent on Tencent.

[@maxjames00077]

Thats what he explained now that changed lol. The structure is now very easily to understand

[@Value-Investing]

they changed it but yes, all the other businesses are not profitable at all and who knows if will ever be!

[@frossato]

It looks that some scammers on the comments created their own metaverse to beat Tencent.

[@Value-Investing]

:-)

[@iwanmuzaki8049]

So when will china bulll start again?

[@Value-Investing]

that is a good question!

[@PonderDuke]

The discount is in owning Tencent cheaper. But they are selling Tencent and buying back their own shares, thus losing the discount on Tencent and losing Tencent while that's where the value is/was. That sounds weird to me. Buy back shares withouth selling Tencent shares is where they value would increase.

[@RafitoMembroza]

The value created is the % of ownership of Tencent per share. Even though the absolute ownership of Tencent lowers, the relative ownership of Tencent per share increases

[@PonderDuke]

Ah yes that's true thanks for explaining!@@RafitoMembroza

[@Value-Investing]

:-)

[@thomashelveg7563]

If you want to own Tencent you buy Tencent.

[@useyourbrain1232]

I made the same mistake with baba so not buying tencent/prosus. There is more to investing that just the numbers

[@Value-Investing]

thanks for sharing!

[@thomasrust6637]

The China discount. Issues with Taiwan. Unlikely to close for as long as the geopolitical issues exist. Good luck predicting that.

[@speeder-tutorials72]

E-commerce tokens are booming. Vennabit Token will go 50x after the launch.

[@martinithechobit]

League of legends?.

[@davidkoba]

I learned my lesson from investing in China.

[@Value-Investing]

thanks for sharing!

[@Politik-mit-Kopf]

I’m not buying Prosus even with the huge discount because I’m missing the track record of the management. It’s like giving money to a rich idiot. You wouldn’t do it. So why give it to an idiot company that got lucky once investing in Tencent but sure enough will never really capitalise on it.

[@ZuZo43]

Vennabit Token is going to the moon! Ecommerce and crypto can help to create a more equitable and decentralized industry

[@bumspanka0927]

Prosus is a collection of unprofitable (bottom line) businesses. I’m not sure it’s undervalued, not for me!

[@Value-Investing]

yep!

[@IamNeox]

If Prosus sells Tencent to buy its own shares, congrats you will be the owner of a cash holding company, haha? Also, when I hear they sell Tencent to finance some garbage stock purchase of a unprofitable delivery business, I'd rather buy AND HOLD Tencent stock itself.

[@Value-Investing]

yep, that is the answer to it all!

[@crohmer]

spouses? We dont all have spouses Sven, stick to the investing instead of marriage talk please

[@Value-Investing]

of all, you are the one that should get a spouse :-)))

[@arbitrage-technologies487]

dont touch that sh… if its a huge margin of safety, its for a reason

[@Value-Investing]

:-)

[@nixielee]

Too complex for me

[@Value-Investing]

thanks for sharing!