Naspers and Prosus’ big opportunity – and big risk


There are mixed views from South Africa’s top analysts and fund managers on whether Naspers and Prosus are good investments amidst significant volatility this year.

Wayne McCurrie from FNB Wealth and Investments highlighted that the Naspers and Prosus share prices collapsed along with all other big tech companies.

The shares spiked on the back of the share buyback programme, gave it all back on China fears, and are now on a run again.

“Naspers and Prosus are still cheap if you believe they can bring their non-Tencent businesses into a positive cashflow and profitable situation,” said McCurrie.

“It boils down to food delivery. You need to ask yourself how long it will take for food delivery to turn around and whether it will work.”

He said Naspers and Prosus’ future is highly dependent on what is happening in their food services division.

“The worst in China, and thus Tencent, is probably over. The valuations have plummeted, and they are no longer growth companies,” he said.

McCurrie believes Prosus’ food delivery businesses will work, which means he is a holder of Naspers and Prosus at the current price.

Sasfin Securities’s David Shapiro

Sasfin Securities’s David Shapiro is less bullish on Naspers and Prosus’ divisions outside of Tencent.

“They are not the high-growth industries you want to get invested in,” Shapiro said.

Shapiro prefers United States tech companies over Tencent, which explains why he is less optimistic about Naspers and Prosus’ prospects.

Ricus Reeders, portfolio manager at PSG Wealth, concurred with Shapiro, saying Tencent carries a lot of risk and the rest of Prosus’ holdings are not in great sectors.

Reeders said while the short-term technical picture looks great, he will not touch Naspers long term because of Tencent.

“The Naspers share price is rising, and I would not sell now. However, long-term, while Naspers remains invested in Tencent, I would not touch it with a barge pole,” he said.

“Tencent, as a Chinese company, is under the direct control of President Xi Jinping, who can change his mind at any time,” Reeders said.

“He is a complete dictator as far as China is concerned, and he does not worry about investors. He is in total control of companies foreigners are invested in.”