|Bid||590.500 x 0|
|Ask||591.000 x 0|
|Day's Range||584.500 - 610.000|
|52 Week Range||318.000 - 614.000|
|Beta (5Y Monthly)||1.00|
|PE Ratio (TTM)||53.66|
|Earnings Date||Nov. 12, 2020|
|Forward Dividend & Yield||1.20 (0.20%)|
|Ex-Dividend Date||May 15, 2020|
|1y Target Est||388.16|
(Bloomberg Opinion) -- Prosus NV, which became Europe’s largest technology company this week, has always been something of a Gordian knot for investors.The Amsterdam-based company derives the entirety of its 141 billion-euro ($165 billion) market capitalization from its 31% stake in Tencent Holdings Ltd., the Chinese e-commerce giant. Indeed, it trades at a $59 billion discount to the value of that holding, meaning that investors essentially ascribe a negative value to its other investments, such as Russia’s Mail.Ru Group Ltd. and Brazilian food delivery platform iFood.Tencent stock has soared 57% increase this year, easily making it the best performer in the firm’s portfolio. This begs the question: Why would Prosus Chief Executive Officer Bob van Dijk put the company’s money in anything else? It’s hard to find other investments that can deliver similar returns. But equally, why invest in Prosus shares to get exposure to Tencent when you could just invest directly in Tencent itself? That’s the Gordian knot which van Dijk has the unenviable task of trying to unravel.On Friday, van Dijk seemed to tacitly admit the struggle to find other investments that could rival Tencent in terms of value creation by announcing plans to buy back as much as $5 billion shares in itself and Naspers Ltd., the South African parent company from which Prosus was spun out last year. It’s a sensible use of the company’s $8.7 billion cash pile, most of which derives from the sale of some of its Tencent stake two years ago.Van Dijk learned the hard way that shareholders are skittish about how Prosus uses its funds for new dealmaking. The spin-out from Naspers was intended to reduce the discount at which the company traded to its Tencent stake. In the days immediately after the Amsterdam listing in September 2019, the ploy proved successful, as Prosus traded closer to the value of its holding in the Chinese firm.But just weeks after the listing, Prosus made a 4.9 billion-pound ($6.4 billion) bid to acquire the British food delivery platform Just Eat Plc. The company’s shares tumbled, reopening the valuation gap to the Tencent holding. Even though Takeaway.com NV ultimately bought Just Eat, Prosus continues to trade at a discount to the value of its assets. The Dutch firm still became Europe’s largest tech company by market capitalization this week after SAP SE shares declined following a profit warning.The buyback ought to provide some reassurance to investors that van Dijk is wary about overspending on deals, though he can always sell more Tencent stock to fund massive acquisitions when a lockup expires next year. Plus they’ll benefit from the reduced share count through greater exposure to the Chinese giant.Van Dijk isn’t so much cutting the Gordian knot as learning to live with it. And that might be what shareholders need.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Prosus NV plans to buy back a combined $5 billion of shares in itself and its South African parent Naspers Ltd. in a move designed to boost shareholder value and narrow a discount between the e-commerce giant and its stake in Tencent Holdings Ltd.The group will aim to pick up $1.37 billion of its own stock and $3.63 billion of Naspers, Amsterdam-based Prosus said in a statement on Friday. The purchase will start following the release of half-year earnings on Nov. 23.“Over the years, our group has achieved improved financial flexibility. It has built a portfolio of e-commerce assets with significant cash-flow generating capabilities,” said Prosus Chief Financial Officer Basil Sgourdos in a statement. “The group is now in a position to both invest in its asset portfolio, and to purchase its own stock when it makes sense from a returns perspective.”The move marks the latest in a series of efforts by Prosus and Naspers to achieve a valuation greater than the sum of its parts, and stop being seen as merely a proxy for investing in WeChat-creator Tencent. Cape Town-based Naspers was an early-stage investor in China’s Tencent, and still holds a 31% stake, but has long been overshadowed by the soaring stock price of its prized asset.Naspers rose 4.1% at 12:08 p.m. in Johannesburg after earlier gaining as much as 4.4% to trade at 3,175 rand. Prosus increased 3.4% in Amsterdam.Naspers spun off most of its internet assets into Prosus just over a year ago in part to resolve the problem, but the move has made little difference. Prosus has a market capitalization of about 135 billion euros ($158 billion), while the Tencent stake is worth about 193 billion euros at current share prices.That means the market assigns a negative value to Prosus’s myriad other businesses, which span from Indian online travel agents to Brazilian food delivery and U.S. education sites.Failed AcquisitionsThe buyback also reflects an inflated cash position after failing to make major acquisitions in the booming e-commerce sector. Prosus lost an $8 billion battle to buy U.K. food group Just Eat Plc to Takeaway.com earlier this year, and in July lost out in a $9 billion auction for EBay Inc.’s classifieds business to Norwegian rival Adevinta ASA“A lot of the international tech assets at the moment are very expensive, and it shows that they see the most value in terms of opportunities out there in their own stock,” said Renier de Bruyn, a Sanlam Private Wealth senior equity research analyst. “There is more than a 50% discount, and they like their current portfolio that they can buy at half the price, so the buyback makes sense.”(Updates with CFO comment, analyst comment, shares)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Beijing’s goal of building a self-reliant technology industry has been elevated to become a strategic pillar, part of the latest five-year plan setting out top national priorities. This means that China is redoubling efforts to wean itself off foreign companies, with the result likely to be a cohort of domestic giants and a slow freeze-out of overseas competitors.Just as the U.S. government starts looking to rein in, or even break up, big technology companies in the belief they have too much power, China is going in the opposite direction. We should expect to see more money, more policy favoritism, and more attention from party cadres aimed at ensuring the establishment of big successful chip and software firms.The Fifth Plenum of the Chinese Communist Party's 19th Central Committee wrapped up Thursday by tasking the nation to, among other things, develop self-reliance and build its technological power.The result will be a more insular approach to industry and trade as Beijing strengthens a robust domestic market for those up-and-coming heroes to ply their wares.Foreign companies — notably in semiconductors, software or materials — that still believe China is a viable long-term business are kidding themselves. Only those supplying crucial products and services not available locally will have any shot at sustained market access, and even then only until a domestic alternative comes along. Intel Corp., Nvidia Corp. and Microsoft Corp. should take note. Apple Inc. and Alphabet Inc. ought to be wary. Meanwhile, suppliers of the equipment, chemicals and software used to design and build chips should enjoy eating at the trough now, because the good times won’t last, if Beijing can help it.The likes of ASML Holding NV, Tokyo Electron Ltd., and Synopsys Inc. might see some growth years as Chinese companies lean on them to supply the core ingredients of a semiconductor industry, if the U.S. administration doesn’t get in their way to further stymie China’s advancement. But they’d be foolish to not understand that local rivals, backed by Beijing, are doing everything possible to replicate their products. Over the past decade, the government has done a lot to improve intellectual property enforcement and secure economic rights over technological innovation. Nonetheless, it would be a brave Chinese prosecutor or judge who sides with a big Western company over a local upstart in any case of alleged IP theft. I believe we’ve yet to see the next era of national champions emerge. Alibaba Group Holding Ltd. and Tencent Holdings Ltd. have been the backbone of China’s internet development. Beijing would want to see their equivalents in semiconductors come forth. Huawei Technologies Co. fits the role, a fact that Washington recognizes by attempting to impede the Shenzhen company’s chip division HiSilicon. Semiconductor Manufacturing International Corp. will also play a part, but after two decades it has still failed to match rivals like Taiwan Semiconductor Manufacturing Co. or United Microelectronics Corp. Then there’s a collection of state-backed chipmakers such as those in the orbit of the esteemed Tsinghua University.Yet the Alibaba of chips may not yet be born.It could be bubbling away in a small Shenzhen office, helmed by former HiSilicon execs determined not to give up their semiconductor dreams despite Washington’s pressure. Or the topic of Zoom calls among locked-down postgrads finishing up their American degrees and planning to return home. Or in the bank balance of a Taiwanese engineer, enticed by the promise of vast riches, after a decade of toiling away at TSMC.Whoever the next big Chinese tech giant is, you can be sure that Beijing has the money and determination to make sure it succeeds. At all costs. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.