Naspers's Prosus Unit Divides Investment Bank Opinions

(Bloomberg) -- Prosus NV, which listed in Amsterdam just last week, is splitting opinion among the first investment banks to cover the stock.

While Jefferies rates the Naspers Ltd. tech-investments unit underperform, Bank of America Merrill Lynch recommends that investors buy the stock.

Jefferies began coverage of Prosus, which owns a 31% stake in Chinese tech giant Tencent Holdings Ltd., with a price target of 61 euros, implying a downside of around 16% from current levels.

Analyst Ken Rumph wrote in a note that there is “frustration” that while Naspers and Prosus have been good investors, there has been no return of any gains. While unattractive operations were spun off and the Dutch listing accessed more passive capital, the e-commerce disclosure remains “thin” for a public company, Rumph also said. He expects Prosus’s net asset value to be largely driven by Tencent.

“After current index flows, we expect Prosus to trade back toward a wider discount as active investors realize they have an ambitious patient capital investor, not a value-maximizing wind-up on their hands,” he wrote in a note.

Bank of America Merrill Lynch analyst Cesar Tiron is more optimistic, with his 97-euro price objective implying potential upside of 33%. Prosus offers exposure to “best-in-class” emerging-market internet assets, he wrote in a note.

Cape Town-based Naspers carved out Prosus for a separate listing to attract a more global investor base and realize more value, while weakening the group’s dominance over the Johannesburg stock exchange.

Prosus shares fell as much as 2.1% Monday and traded at 72.97 euros as of 12:47 p.m. Amsterdam time, with the retreat taking them 4% below their 76 euros debut level last Wednesday.

Last week, Spin-Off Research began its coverage of Prosus with a buy rating and 99 euros price target.

(Updates to add BofAML rating and analyst comments.)

To contact the reporter on this story: Kit Rees in London at krees1@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, John Viljoen, Paul Jarvis

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