Key insights
- The author argues Prosus is undervalued due to its Tencent stake and profitable e-commerce portfolio in high-growth markets. A CEO incentive to double the market cap by 2028 and recent sell-off due to macro concerns present a compelling entry point. While Prosus's performance indirectly impacts US-listed Tencent holdings and global investor sentiment, the direct influence on the broader US equity market is limited.
The 5-Point Thesis
- Tencent is a Steal: At ~14x EV/EBITDA, you’re buying the dominant king of the Chinese internet at a utility-like multiple. The China risk is already baked into the price. 2. The Free"Portfolio is Profitable: Prosus is no longer just a passive holding company. Its Ecommerce segment (iFood, OLX, etc.) is now Free Cash Flow positive. You aren't just getting these assets for free; you're getting paid to own them. 3. Global South Dominance: While others fight over the US/Europe, Prosus owns the #1 players in high-growth markets: iFood (Brazil), Swiggy (India), and PayU (Fintech). 4. $100M CEO Incentive: New CEO Fabricio Bloisi has a massive moonshot payout if he doubles the market cap by 2028. His interests are perfectly aligned with yours to close the valuation gap. 5. Timing: Recent sell-off due to macro uncertainties and negative reaction to Tencent’s AI spending offers an attractive entry point with wide discount to Tencent/NAV.
Here's my deep dive on Substack on Prosus:
https://theproteavault.substack.com/p/the-negative-value-paradox-inside?r=76seop