The rest is for free

This is amazing. Really amazing. Listen in really closely. What prompted me to do the calculation of what is the TenCent stake inside of Naspers worth was a client email expressing concerns around the valuation. Naspers is a difficult one to value. But my go to calculation is the stake in TenCent and then using the rest of the company and their other quality businesses to is pretty simple. Take the TenCent market cap in Hong Kong, which right now is 967.37 billion Hong Kong Dollars. Naspers owns 34.5 percent of TenCent, that translates to 333.74 billion Hong Kong Dollars. Now one Hong Kong Dollar is equal to 1.4219 Rands. So, quite simply, multiply 333.74 billion HKD by 1.4219 and that equals 474.54 billion Rand. Yowsers.


Now this is the part that you need to lean in to your screen, come on, do it. Last evening, Naspers closed at 467.9 billion Rand. I see. That means that their stake in TenCent is worth more than their market cap is right now. Which means that the balance of this market gives that market absolutely no credit whatsoever, those people in Hong Kong you know, they don't know how to value companies. Maybe. but heck, maybe not!! A company which is growing revenues quarter on quarter by around 8 percent. TenCent, as at the end of their third quarter (September) had 815.6 million users. And a net margin of 25 percent. Astonishing. So whilst everyone a couple of quarters ago was worried about how internet companies were going to monetise mobile, don't worry chaps, TenCent has been doing this for years. But at the same time, TenCent trades on a fifty (that is right 50) multiple. The growth is going to have to continue to be stellar from this point on to justify that. With ARPU's at around 6.3 Yuan a month per customer, that is around one Dollar a month. Early stages still. And when buying Naspers today, you still get all of that for free.