Naspers | Building pillars

Following the unbundling of Multichoice, Naspers delivered credible results (core diluted HEPS +26%y/y) with the non-Tencent assets moving closer to breakeven (rump losses -33% y/y) and being self-sustaining on a cashflow basis. The Group will accelerate investment in food delivery, given that the industry remains in a nascent state globally. However, we expect accelerating profits of classifieds to counterbalance increased development spend in food delivery. Importantly, the Group has reaffirmed that the existing cash resources are sufficient to create critical mass for the Group's portfolio.

Naspers has actioned several moves over the past two years as the company focussed on addressing the discount. Selling a piece of Tencent (proceeds: USD9.8bn), listing the historic cash cow, MultiChoice, driving performance toward being a Tencent+ company, improved disclosure and the announcement of Prosus to be listed on the Euronext all form part of Naspers' discount management playbook. We believe Naspers' next steps, post the Prosus listing, include a potential listing of OLX and consolidation in the food delivery segment. Ultimately, we believe the discount will narrow as the value of the classifieds, food delivery and payment businesses are proven.