Alphyn Capital - Naspers: Rout In Internet Company Valuations

Apr. 27, 2022 12:34 AM ETNaspers Limited (NAPRF), NPSNYDELHY, DLVHF, JD, MLRYY, SE, TCEHY, TCTZF4 Comments


  • Naspers shares have come under a lot of pressure lately.
  • The company still has solid fundamentals and attractive opportunities.
  • Naspers management has suggested it will take further steps to simplify its corporate structure.

Global connection

piranka/iStock via Getty Images

The following segment was excerpted from this fund letter.


Naspers shares have come under a lot of pressure lately. The rout in internet company valuations has directly impacted its portfolio of companies. For example, Delivery Hero's (OTCPK:DELHY, OTCPK:DLVHF) stock declined 61% in the quarter. Additionally, Naspers decoupled from Avito in Russia and had to write down $700m for its holding in VK Group (OTC:MLRYY) (formerly Meanwhile, Tencent (OTCPK:TCEHY) continues to be impacted by regulatory fears in China.

While regulation remains a critical risk, a meeting of China's top financial policy committee led by Vice Premier Liu He1 called on regulators to "actively introduce policies that benefit markets" and indicated the worst of regulations might be over. Regulations have undeniably curtailed some of Tencent's growth, especially in its advertising and games businesses. Even so, the company still has solid fundamentals and attractive opportunities. For example, in gaming, Tencent has a network of 30 international studios with a global pipeline of 40+ games growing at 25% per year, not targeted by regulation in China. In business services, Tencent is investing in internet- as-a-service and platform-as-a-service products to capture the ample cloud opportunity in China.

Tencent's core business trades at 16x forward P/E, and the risks are priced in for what remains a very high-quality business. It is encouraging that management seems focused on capital allocation. Tencent has built a large and successful investment business, buying companies when they are private and seeing many of them progress to IPO. Tencent recently spun-out shares in (JD), divested some of its stake in Sea Ltd. (SE) and indicated more could come.2 Meanwhile, Naspers management is under increasing pressure to reduce the "unacceptable" ~$86bn discount and suggested it will take further steps to simplify its corporate structure.


1 China Makes Strong Vow to Ease Crackdowns After Market Turmoil

2 2021 Q4 earnings call

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

This article was written by

Single stock ideas excerpted from fund letters published by Seeking Alpha.

Additional disclosure: The description herein of the approach of Alphyn Capital Management, LLC and the targeted characteristics of its strategies and investments is based on current expectations and should not be considered definitive or a guarantee that the approaches, strategies, and investment portfolio will, in fact, possess these characteristics.

Reference or comparison to an index does not imply that the portfolio will be constructed in the same way as the index or achieve returns, volatility, or other results similar to the index. Unlike indices, the model portfolio will be actively managed and may include substantially fewer and different securities than those comprising each index. Results for the model portfolio as compared to the performance of the Standard & Poor’s 500 Index (the “S&P 500”) for informational purposes only. The S&P 500 is an unmanaged market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent US equity performance. The investment program does not mirror this index and the volatility may be materially different than the volatility of the S&P 500.

Performance results of the master portfolio are presented for information purposes only and reflect the impact that material economic and market factors had on the manager’s decision-making process. No representation is being made that any investor or portfolio will or is likely to achieve profits or losses similar to those shown.

Results are net of all standard fees calculated at the highest rate charged, expenses and estimated incentive allocation. Model portfolio returns are inclusive of the reinvestment of dividends and other earnings, including income from new issues. The return is based on annual returns since inception and does not give effect to high water marks, if any. Returns may vary for investors who are restricted from participating in new issues.

Hypothetical performance results are unaudited and do not reflect actual results of any accounts managed by Alphyn Capital Management, LLC. Hypothetical performance results are for illustrative purposes only and are not necessarily indicative of performance that would have been actually achieved if an investment utilized the strategy during the relevant periods, nor are these simulations necessarily indicative of future performance of the strategy. Inherent limitations of hypothetical performance may include: 1) hypothetical results are generally prepared with the benefit of hindsight; 2) hypothetical results do not represent the impact that material economic and market factors might have on an investment adviser's decision-making process if the adviser were actually managing client money; 3) there are numerous factors related to the markets in general, many of which cannot be fully accounted for in the preparation of hypothetical performance results and all of which may adversely affect actual investment results.

There is no assurance that any of the securities discussed herein will remain in an account’s portfolio at the time you receive this report or that securities sold have not been repurchased. The securities discussed do not represent an account’s entire portfolio and, in the aggregate, may represent only a small percentage of an account’s portfolio holdings. It should not be assumed that any of the securities transactions or holdings discussed were or will prove to be profitable or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein.

The graphs, charts and other visual aids are provided for informational purposes only. None of these graphs, charts or visual aids can and of themselves be used to make investment decisions. No representation is made that these will assist any person in making investment decisions and no graph, chart or other visual aid can capture all factors and variables required in making such decisions.

This report is for informational purposes only and should not be construed as investment advice. It is not a recommendation of, or an offer to sell or solicitation of an offer to buy, any particular security, strategy or investment product. Our research for this report is based on current public information that we consider reliable, but we do not represent that the research or the report is accurate or complete, and it should not be relied on as such. Our views and opinions expressed in this report are current as of the date of this report and are subject to change. Any reproduction or other distribution of this material in whole or in part without the prior written consent of Alphyn Capital Management, LLC is prohibited.

Recommended For You

Comments (4)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.