Our opinion on the current state of NPN

Naspers (NPN), Africa's largest company, is a massive international social media, gaming, and IT company whose main asset is 73% of Prosus (PRX) which in turn owns 26% of Tencent - a Hong Kong-listed company that provides social media services and gaming in China. Tencent has 10 of China's 20 top mobile applications reaching over 1,1bn users. Naspers itself has an archaic capital structure where it is dominated by its 907128 unlisted "A" ordinary shareholders. Each "A" ordinary share has 1000 times the voting power of the 438,3m "N" shares which are listed - so they effectively control the company with 67,4% of the vote. Naspers has many other interests, mainly in e-commerce and operates in 120 countries worldwide. It has recently bought a further $500m worth of shares in Letgo - an American classifieds platform that has more than 100 million users. It also owns Takealot and Mr. D Food in South Africa among other interests - but all those other investments are dominated by Tencent. The share's discount to its inherent value is mainly because of its "N" share structure which is frowned upon in the investment community. Naspers has retained its online shopping operations, Takealot, Mr. D. Food, PayU and Autotrader. On 11th September 2019, Naspers separately listed Prosus on the Euronext in Amsterdam which houses all its international assets including its stake in Tencent, Mail.Ru and other internet brands. Naspers held 73% of Prosus and there was a 25% free float. The company has a secondary listing on the JSE. One of the benefits of the Euronext listing is that it removes the risk inherent in the rand. Prosus is now Europe's largest consumer internet company. Tencent continued to grow through the pandemic as more people turned to online gaming. On 26th July 2021 Tencent fell about 8% due to Chinese clamp-down on its music streaming business. This obviously impacted Prosus and Naspers with their shares falling in tandem. According to Business Day of 10th September 2021, there was a report in the South China Morning Post that to the effect that the approval of new games was prohibited. This caused both Prosus' and its parent, Naspers' shares to fall sharply. On 24th October 2022, the re-election of Chinese leader Xi Jinping for a third term caused Naspers shares to fall heavily. Jinping is part of a faction in Chinese politics which aims to keep the "disorderly expansion of capital" under control. The company realised a profit of $12,3bn on the sale of 2% of Tencent in April 2021. On 17th August 2022 Naspers said that it intended to sell Prosus shares and to use the proceeds to buy back more of its own shares. On 27th January 2023 Bloomberg announced that Naspers intended to retrench about 30% of its workforce. In its results for the year to 31st March 2023 the company reported revenue slightly up at $6,78bn and headline earnings per share (HEPS) of 119c compared with 547c in the previous year. The company announced on 27th June 2023 that Naspers was going to unwind the cross shareholding between in at Prosus. The news was well-received by the market because it simplified the overall structure of both businesses making them easier to analyse. In a trading statement for the six months to 30th September 2023 the company estimated that HEPS from continuing operations would be between 282c and 284c compared with 28c in the previous period. Technically, the Prosus share price came off because of rand strength, the complexity of the share swap and then on 26th July 2021 the share fell 7% due to new Chinese regulations which impact on Tencent's music streaming business. The sudden drop in the share price was due to the re-election of Xi Jinping as Chinese premier. Since October 2022 the share has staged a recovery, but has been moving sideways since March 2023. We still regard this share as under-priced at current levels. On 18th September 2023 the company announced that Bob van Dijk would resign as CEO with immediate effect.