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0 pointsjacobajit4y ago0 comments

Naspers' market cap is 98B, yet they own 31% of Tencent which is worth 775B - am I missing something? I'm aware of conglomerate discounts but I suspect there's something else going on here.

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skinnymuch4y ago

If you read up a bit on Naspers and Prosus. They have been trying to solve the discount problem. That’s the reason for Prosus being listed in Europe. Naspers is too big for South Africa’s stock market. It still is a bit too big.

Share buy backs and one or two other strategies are their next options along with the recent sale of some of Tencent to diversify. Like one strategy is for the two companies to exchange their stocks to own one another more. Own one another more.

SoftBank has a similar massive discount. I believe SoftBank is worth around as much as their Alibaba stake. While they also have stakes in T-Mobile US of around 8% (Tmobile market cap is $175B so that’s $14B) and 50% of Z Holdings (Yahoo Japan + LINE) which has a $30B market cap

One caveat to the T-Mobile stake is that U believe Deutsche Telekom is currently and can in the future buy back a considerable amount of Softbank’s shares. Perhaps at a discount. Nonetheless their stake is still going to be very sizeable.

So SoftBank is like Naspers and Prosus in that their market values and claim to fame and money rested on one moonshot. Now their valuations are awful.

SoftBank of course has other issues possibly with the founder and CEO and their vision fund but it was undervalued even five years ago.

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Another issue is what is the final value of those stakes. How would they get taxed etc. It is rare for big companies to have the majority (or even say 50%) of their value come from a stake in an unrelated company. I don’t think there are any other examples of this.

For related stakes. I think Deutsche Telekom is not worth much more than their T-Mobile US stake and they do more than just that.

xkjkls4y ago

Most of what I read previously about this has to do with a lot of uncertainty about how the Nasper's stake in Tencent will eventually be taxed or how the value will be extracted, and a lot of uncertainty about South African business in general.

Note that Prosus, which is a subsidiary almost completely owned by Nasper (they have a small amount of public float), is worth close to $180 billion, which is much closer to the Tencent holding value. This reflects that people are much more confident of Dutch business than of South African business, and there probably is every right to be.

skinnymuch4y ago

They are trying things. I read an article recently where they’re going to try lowering Naspers impact in South Africa as such a giant part of the market and other lower valuation issues for both companies by exchanging or buying one anothers shares so both companies will own sizeable portions of each other. Versus right now it only goes one way.

adrianb4y ago

The same was true of Yahoo in its last days as an independent company. Their holdings in Alibaba and Yahoo Japan (an independent, successful company) were worth more than Yahoo's market cap.

Selling Yahoo to Verizon meant splitting the web properties out from the company, leaving it as a shell for its holdings.

MangoCoffee4y ago

>In 2001, Naspers made an early, successful investment of US$32 million, in Tencent. As of 2018, Naspers had approximately a 31 percent stake in Tencent, becoming its largest shareholder

https://en.wikipedia.org/wiki/Naspers

its probably because of their early investment in Tencent.

skinnymuch4y ago

The issue OP is bringing up is how their market cap is so small. 18% of $775B is more than $100B. It also means everything else they own is worth negative technically.

j / k navigate · click thread line to collapse

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skinnymuch4y ago

So SoftBank is like Naspers and Prosus in that their market values and claim to fame and money rested on one moonshot. Now their valuations are awful.

SoftBank of course has other issues possibly with the founder and CEO and their vision fund but it was undervalued even five years ago.

—

For related stakes. I think Deutsche Telekom is not worth much more than their T-Mobile US stake and they do more than just that.

xkjkls4y ago

skinnymuch4y ago

adrianb4y ago

The same was true of Yahoo in its last days as an independent company. Their holdings in Alibaba and Yahoo Japan (an independent, successful company) were worth more than Yahoo's market cap.

Selling Yahoo to Verizon meant splitting the web properties out from the company, leaving it as a shell for its holdings.

MangoCoffee4y ago

>In 2001, Naspers made an early, successful investment of US$32 million, in Tencent. As of 2018, Naspers had approximately a 31 percent stake in Tencent, becoming its largest shareholder

https://en.wikipedia.org/wiki/Naspers

its probably because of their early investment in Tencent.

skinnymuch4y ago

The issue OP is bringing up is how their market cap is so small. 18% of $775B is more than $100B. It also means everything else they own is worth negative technically.

j / k navigate · click thread line to collapse