What's the Beef with: Naspers stock analysis (NPN)

Naspers Limited (NPN)

The date is set, and we are almost set for lift off as Prosus the latest e-commerce business offering from Naspers is finally set to make its debut on Amsterdam’s Euronext Stock Exchange.

The proposed date is the 11^th of September to list in Amsterdam with a shareholders meeting still to take place on the 23^rd of August 2019 in Cape Town. Prosus, will include all the group's internet assets outside of SA, including its 31% stake in Chinese internet giant Tencent.

Please also have a look at the EGM Circular SENS announcement for more information on the EGM. 

Take note: that this unbundling is dependent on the resolution being passed at the EGM. If shareholders do not vote for it, it will not go through.

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Prosus, the Latin word for “forwards” is certainly a step forward for Naspers, which has its humble beginnings dating back to 1915 as De Nasionale Pers Beperkt (National Press Ltd). Prosus is expected to be the biggest listed consumer internet company by asset value in Europe.

Naspers will retain 73% of the new business, giving it a free float of 27% with the hopes to attract new investors. Naspers will retain its primary listing on the Johannesburg Stock Exchange (JSE) with Prosus having a secondary inward listing on the JSE.

How will this affect the Naspers shareholders?

The info graphic below gives a great illustration of the corporate action with a proposed timeline of events to take note of if you are a Naspers share holder.

Select image for larger view
Source - Naspers

Shareholders will receive shares in the new company (Prosus) or can choose to receive more shares in Naspers instead, subject to certain limits.

In short, by looking at the infographic - as a Naspers share holder deciding to participate in the corporate action:

• Each holder of a Naspers N share will be entitled to one Naspers M (capitalisation) share. For each Naspers N share you hold you will be issued one Prosus N share in exchange for each Naspers M share.

And if you elect not to participate in Prosus shares:

• Each holder of a Naspers N share will be entitled to 0.36986 Naspers N shares instead of each Naspers M share to which they are entitled.

Chart Life

We might expect the share price to move lower with the un-bundling, but without a doubt a lot of value will be unlocked in Naspers. By looking at the chart, we can see the latest breakout from the triangle pattern as the price action pushes higher to the R3 610/ share level.

The price action has been consolidating over the last month and at current price levels we would need to see a close above the R3 610/ share resistance level to support a bullish outlook. The technical triangle pattern breakout level might be retested at R3 510/ share before we push higher once more.

Source - Bloomberg

Best news of all: Naspers is a #Thrive 50 share, which means 'Thrivalists' stand to pay $0 in brokerage fees when purchasing Naspers stock on EasyEquities.

Portfolio particulars:

• Portfolio Hold (Current)*
• Portfolio Buy opportunity: close above R3 510.00 per share**. 
• WhatsTheBeef long term target price: R3 720.00 per share. 

#WhatsTheBeef stock summary:

Unlocking value for shareholders overtime and adapting to economic conditions has seen Naspers become one of the largest tech investors in the world. This was evident in the latest earnings released in June which saw its HEPS increase significantly by over 30%. 

With its latest move to separate its internet assets, it might just be the next step in the exciting Naspers story. Undoubtedly, the group hopes to narrow the discount Naspers' shares trade at relative to the value of its assets. It will turn out to be either a brilliant move by Naspers, or an epic fail. Only time will tell.

The un-bundling will see its weighting reduced on the JSE which has also raised its own concerns over the last couple of years. At this stage of the race, Naspers still has an attractive offering which should be part of one’s portfolio.

Know your company: Naspers Limited (NPN)

• Naspers was founded by W. A. Hofmeyr back in 1915 under the name De Nasionale Pers Beperkt as a publisher and printer of magazines and newspapers.
• The original reason for the founding of Naspers was to empower the impoverished Afrikaner nation after the devastation of the Anglo Boer War.
• Naspers, for those who do not know, has the largest weighting on the JSE with just over 23% and most of its revenue comes from Asia.
• The Naspers investment in Tencent paid off big time. At one stage the market value of its Tencent holdings was greater than the market capitalization of the firm itself. The move has been referred to as one of the most successful venture capital investments of all time.

*Portfolio Hold (Current) refers to investors who already hold the stock within their portfolio.

**Portfolio Buy opportunity refers to Technical level crossed which might imply that the markets behaviour would support the outlook and Close above refers to a share price close above a Technical Resistance level.

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Barry is a market analyst with GT247.com, with a wealth of experience in the investment markets. Now in his tenth year in the markets, Barry "The Beef" Dumas brings a combination of technical analysis and fundamental insights to the table.