Prosus: From Tencent-minus to Tencent-plus?

Over the past decade, Naspers was mostly regarded as a cheap entry point into Tencent, the Chinese technology and digital services giant. The same applied to its international consumer internet subsidiary, Prosus, spun out in 2019.

Naspers traded at a persistent and often frustrating discount to its Tencent stake, driven not only by the usual holding company mechanics but by the fact that Prosus’s sprawling portfolio of e-commerce assets was, for many years, burning cash. Investors implicitly valued these businesses as negative contributors to NAV: a drag on the Tencent position, rather than a source of upside.

This long-running narrative is finally beginning to shift.

Prosus’s share price may still move largely in tandem with Tencent’s — both are up roughly 50% year to date — but the group’s global e-commerce businesses, once viewed as speculative or perpetually subscale, have reached a clear inflection point. Adjusted earnings have turned positive; cash flow is improving sharply; and, for the first time in Prosus’s history, its operating portfolio is generating positive free cash flow independent of the Tencent dividend.

That said, at $118m annualised, the cash flow contribution represents less than 10% of the $1.24bn Tencent dividend. That’s still too small to meaningfully shift the needle, which helps explain why Prosus’s share price still tracks Tencent’s so closely.

Yet the operational momentum is undeniable. In the latest interim reporting period, Prosus delivered $530m in e-commerce adjusted ebitda and management has outlined a path to “at least $1.1bn” in ebitda for 2026, with scope for materially more beyond that.

In valuation terms, Tencent continues to dominate the portfolio. Prosus’s market capitalisation of about $138bn is trading at a 16% discount to the value of its 23% stake in Tencent alone.

If you include Prosus’s smaller listed holdings and broad unlisted portfolio — mainly food delivery and online classifieds — the implied discount to NAV deepens to about 32%. Though the gap relative to Tencent has narrowed only marginally from about 20% three years ago, the share price performance of both Prosus and parent Naspers has outpaced what that discount might suggest.

A key driver of this has been Prosus’s ongoing multiyear share buyback programme. The mechanics are highly accretive. By gradually selling down portions of its Tencent holding and using the proceeds to repurchase its own shares, Prosus effectively increases each remaining share’s proportional exposure to Tencent, thus enhancing NAV per share.

The persistent discount to Tencent suggests that the market remains cautious about the durability of Prosus’s operational progress, as well as management’s ambitious forecasts. The company values its unlisted assets at $36bn. That implies a lofty earnings multiple of nearly 33 times ebitda, based on its projected 2026 ebitda of $1.1bn. Notably, this figure excludes the group’s $5bn in net debt, which does act as a drag on the overall valuation.

Still, the group’s long-stagnant non-Tencent core is showing clear signs of life, steadily shifting the group from a passive investment vehicle into a growth-orientated global technology operator. It is now actively advancing its strategy to build the “No 1 lifestyle e-commerce company” across Latin America, Europe and India.

This momentum is being reinforced by disciplined capital allocation — another key shift in the group’s evolution. Over the past 12 months, Prosus has raised $2.6bn from noncore asset disposals, while deploying $7.8bn into strategic acquisitions designed to strengthen its regional ecosystems.

There are several notable additions.

Despegar, combined with the existing iFood, forms a powerful Latin American e-commerce and loyalty platform serving 13-million subscribers.

Just Eat Takeaway (JET), which gives Prosus a critical food delivery anchor in Europe, has now been taken private. La Centrale, a leading French auto classifieds platform, expands reach in Western Europe.

Prosus and Naspers CEO Fabricio Bloisi has made the scale of his ambitions clear. He told investors at the 2026 interim results presentation that Prosus aims to build more than $100bn of value outside Tencent and establish itself among the world’s leading technology companies.

We’ve delivered on our promise

—   Fabricio Bloisi

He has offered similarly bold statements before, but this time the numbers are beginning to give them some credibility. As he reminded analysts during the Q&A session: “One year ago, I told you I expect us to have more [ebitda] profits than Tencent dividends. Many people said: ‘I can’t see Prosus doing that.’ But we’ve delivered on our promise.”

Bloisi was appointed to lead both Naspers and Prosus — the two companies have significantly overlapped boards and shared executive leadership — after serving as CEO of iFood, the Brazilian food delivery company he acquired in 2013 when it was a fledgling 20-person start-up. Under his leadership, iFood grew into a regional giant and the crown jewel of Prosus’s Latin American operations.

To align Bloisi’s incentives with shareholder interests, Prosus and Naspers have put in place a one-off “moonshot” award that could deliver him a $100m windfall — but only if he creates exceptional value. The terms are stringent. First, he must double the combined market capitalisation of Prosus and Naspers by June 30 2028 and sustain that level for an additional year. Second, he must outperform the median of a group of global tech peers in total shareholder return — share price appreciation and dividends — over that period.

The group is betting that he can replicate in other regions what he achieved in Brazil, by turning a collection of separate businesses into tightly integrated regional “ecosystems” that reinforce one another and unlock cross-sell opportunities.

Bloisi emphasised this vision repeatedly at the results presentation, describing Latin America as “our inspiration” — a working prototype of what Prosus now aims to reproduce in Europe and India. “It’s not only about one company, iFood, or another company, Despegar,” he said, “but about how the ecosystem helps each other to grow faster.”

Latin America’s scale is striking. Prosus now serves more than 100-million customers in the region, with an annualised gross merchandise value approaching $25bn and expected adjusted ebitda of about $500m in 2026.

At the centre of this flywheel sits iFood — by far the strongest and most defensible asset in Prosus’s non-Tencent portfolio. Long recognised as the dominant food delivery platform in Brazil, iFood has in recent years expanded well beyond takeaway meals, becoming an anchor for payments, loyalty, credit, smart point-of-sale systems, dine-in integration, buy-now-pay-later (BNPL) services and a fast-scaling grocery offering. Bloisi describes food delivery as a “very high-frequency business” that provides the behavioural foundation from which every other service can be sold, tested or cross-promoted.

That ecosystem deepened with the acquisition of Despegar (known as Decolar in Brazil), the region’s leading online travel agency. After running “lots of experiments, lots of new product launches, discounts, tests and vouchers, and cross-sell and cashback”, iFood referrals now account for 5% of Despegar’s net revenue, achieved within six months of closing the deal.

“We are quite confident that we found a way through our loyalty system to cross-sell from the high-frequency 70-million users from iFood to benefit all our other assets,” Bloisi said, adding that the team expects this share to “keep increasing fast”.

The Despegar integration is perhaps the clearest proof point of Prosus’s ecosystem thesis: that the value created by connecting businesses can exceed the intrinsic value of the individual companies themselves. And this approach is now being exported beyond Latin America, with the company seeing “$50bn potential” in each of its core regions against the current valuation ranges of about $10bn-$20bn.

Europe, though at an earlier stage in its journey, has begun laying the same structural foundations. The acquisition of JET, which was delisted to allow for operational restructuring away from the quarterly scrutiny of public markets, provides a high-frequency anchor akin to iFood. Prosus intends to “reinvigorate growth through enhanced customer segmentation, advanced technology integration and operational improvements”.

Meanwhile, OLX, the online classifieds platform, delivered a remarkably strong performance, with revenue up 22% and adjusted ebitda rising 52% to $231m, supported by margin expansion and category-specific innovations in motor vehicles, real estate and jobs. Motors, now representing $191m in revenue, grew 27% and achieved adjusted ebitda margins of 60%, driven by “enhanced monetisation initiatives, innovative dealer tools, improved advertising solutions and optimisations to the search experience”.

Management emphasises that progress in Europe is still at an early stage but is rapidly improving. With eMAG, iyzico, OLX and JET forming the core pillars, Europe’s emerging ecosystem is powered by the AI-first philosophy that now defines the group. Iyzico’s payments solutions, for example, grew revenue 50% while expanding offline payments and AI-driven tools, positioning it as a connector across e-commerce flows in Türkiye and neighbouring markets.

India, too, is strengthening, built around the payments engine PayU, which grew revenue 20% with adjusted ebitda margins improving from -8% to 1%. The Indian ecosystem leverages India’s digital transformation plus the country’s vast consumer base.

Prosus’s investments in companies including Swiggy, Meesho, Urban Company, BlueStone and PharmEasy are increasingly interconnected. PayU now provides credit for restaurants on Swiggy, early-settlement services for Meesho sellers and BNPL options for consumers — concrete links that improve engagement and create data advantages across the platform.

One key challenge to building a more integrated ecosystem in India is that many of Prosus’s investments in the region are minority stakes, limiting its ability to drive strategic alignment and cross-platform synergies across its portfolio.

AI is going to have an impact everywhere: classifieds, e-commerce, food delivery, analysts’ reports from banks

—  Fabricio Bloisi

AI is increasingly becoming a common thread across all three regions.

Bloisi was emphatic about this during the results presentation: “AI is going to have an impact everywhere: classifieds, e-commerce, food delivery, analysts’ reports from banks. There will be AI winners that will create trillions of dollars of value.”

Prosus intends to be one of them. The company is now deploying a “large commerce model”. This is its own large language model (LLM), trained on the interactions of more than 2-billion customers across nearly 100 companies, to predict behaviour and personalise every touchpoint. “It is one model to do all the transactions we have,” Bloisi said, “and now we’re inserting that in many of our own services, with good results all around.”

But AI at Prosus does not stop at LLMs. The group has embraced what it calls “agents” — AI systems performing tasks that previously required human employees. Prosus now has “close to 20,000 agents inside the company doing the job of a few thousand people”, allowing the group to “reduce costs, move faster [and] be one of the best operations using agents in the world”. These agents are also used in marketing, with the Advolve acquisition enabling AI-generated ad creation, testing and optimisation at scale.

The long-term ambition is to mirror the ecosystem effects seen in leading global tech giants. As Bloisi put it: “Google and Microsoft and Meta and Tencent are winning, not only because they have one key product, but because they have a scale inside an ecosystem that enables cross-sell AI technology. We have that and we will have benefits from that.”

Brokerage opinions are largely upbeat. According to MarketScreener, 15 out of 18 analysts rate Prosus a buy, with an average price target at about €69 — about 25% above the current €55. JPMorgan’s team, for instance, reaffirmed their buy rating right after the half-year results and nudged their target to €74, expressing confidence in Prosus’s accelerating e-commerce profitability and its core Tencent exposure. Deutsche Bank and Swiss investment bank UBS likewise reiterated buy recommendations in late November.

Even Citigroup, which trimmed its target slightly to €72, maintained that Prosus’s fundamentals support further upside. A common thread in these bullish outlooks is valuation. Prosus still trades at a sizeable discount to its look-through asset value, with the stock’s market cap remaining 16% below the value of its Tencent stake alone, effectively assigning negative worth to the rest of the portfolio.

Investment bank Jefferies, once a sceptic, calls Bloisi’s plan a “bold new path” and in September upgraded Prosus from hold to buy while raising its price target from €37 to €65.50. It argues that “the great unwind of the conglomerate discount has begun”, as Prosus’s substantial resources and buybacks start convincing investors that the group’s ecosystem strategy will succeed in the long term.

With Prosus consistently selling small slivers of Tencent to fund big share repurchases, Jefferies sees a long-term catalyst for NAV accretion, and believes the group is worth more than the sum of its parts.

Tencent’s resurgence has been central to many analysts’ optimism. After a rocky 2022, the Chinese social media and gaming titan has roared back with double-digit growth. Third-quarter revenue jumped 15% year on year, surpassing expectations, as flagship games such as Honor of Kings, Peacekeeper Elite and Delta Force rebounded.

Advertising soared 21% thanks to new AI-driven targeting tools. Tencent’s net profit also beat forecasts by a wide margin. Off the back of those results, Barclays raised its target on Tencent’s US shares to $102 (from $77) and reiterated an overweight rating, highlighting the company’s “strong financial performance” and success integrating AI across its platforms.

A thaw in China’s regulatory stance — with Beijing easing its tech crackdown and even touting support for leading platforms — has further improved sentiment. Crucially for Prosus, Tencent’s strength provides a steady flow of dividends and disposals to fund its own ventures.

Not all investors are persuaded, though, as recent share price movements suggest

Not all investors are persuaded, though, as recent share price movements suggest. Prosus has dropped 10% over the past month — more than three times Tencent’s 3% decline — and remains down 4% since posting its latest results, with Naspers faring slightly worse over the same period.

This caution appears to echo the sentiment of a few brokers who have urged restraint on the pace of further upside. Morgan Stanley, for instance, downgraded Prosus to equal-weight earlier this year and adjusted its target price downward to a modest €57 after the interim 2026 results. The firm’s concerns centre on the competitive dynamics unfolding in food delivery in Brazil and Europe.

In Europe, players such as Delivery Hero and others have signalled a renewed push into expansion mode, with increased investment flagged as a central strategic priority — raising the likelihood that margins across the sector could remain under pressure amid intensifying rivalry.

The heat is rising just as quickly in Brazil, where competition in food delivery is entering a new phase. Meituan, the dominant player in China’s on-demand economy, has formally announced its entry into the Brazilian market, joining the recently revived 99Food, now back under the wing of Chinese ride-hailing giant DiDi.

Their arrival sets the stage for a fresh round of disruption in a market long dominated by Prosus-owned iFood. These Chinese giants are bringing deep pockets and disruptive playbooks. Meituan has already shown its ability to dislodge incumbents in Hong Kong and Saudi Arabia with a mix of aggressive consumer discounts, higher pay for riders and low fees for restaurants.

Now it’s replicating that formula in Brazil, a $23.7bn market expected to hit $36.7bn by 2030. To shore up its moat, iFood formed an unexpected alliance with Uber earlier this year, allowing each company to offer complementary services across their respective apps.

Despite iFood’s commanding 80% market share, this new wave of competition is anything but benign.

Meituan expects to onboard 100,000 delivery riders and recruit thousands of support staff in its first year, while 99Food is enticing new restaurants with a two-year fee holiday and guaranteed minimum earnings for couriers.

These aggressive tactics are targeting precisely the small and mid-sized businesses that have long felt squeezed by iFood’s 27% commission structure. While iFood has dominated Brazil’s delivery scene largely unchallenged since Uber Eats and 99Food withdrew in 2023, it now finds itself at the centre of a high-stakes battle.

Another growing threat is the rapid advance of generative AI, especially in the online classifieds space. Since OpenAI’s developer day — where it introduced browser-like capabilities within ChatGPT — and the unexpected AI-driven profit warning from Rightmove, the UK’s largest digital real estate platform, shares in classified businesses globally have come under pressure.

The worry is that generative AI could compress margins in an industry long dependent on manual listing creation, lead generation and paid ad placement. With AI now capable of generating listings, refining search and matching algorithms, and offering tailored recommendations, traditional classifieds platforms are at risk.

The greater fear is that AI agents could become the primary interface for users searching for local services or second-hand goods, scanning multiple sources in real time and bypassing standalone platforms altogether. That would undermine the defensibility and centrality of the classifieds model.

At a broader level, observers caution that Prosus remains closely tethered to the Chinese market, with its fortunes still largely shadowing those of Tencent. Any setback in Tencent’s performance — or a revival of regulatory pressure from Beijing — could quickly ripple through Prosus’s valuation.

While the group’s recent shift away from aggressive deal-making towards a more disciplined focus on organic growth has been welcomed, its acquisition this year of the underperforming JET in an increasingly crowded European market has reignited concerns about capital allocation.

Under former CEO Bob van Dijk, Prosus’s acquisitive strategy often struggled to generate clear returns. What gives some investors comfort this time is the credibility of Bloisi, whose deep operational expertise as iFood offers hope that JET can be integrated and revitalised over time.

Overall, the consensus view is that Prosus is on a clearer upward path. A leaner, more focused company is emerging. It is increasingly seen as a compelling buy, offering not just discounted exposure to Chinese big tech, but also a growing collection of high-potential e-commerce ventures around the world.

As some analysts have framed it, the narrative is shifting from “Tencent-minus” to “Tencent-plus”. That optimism is echoed in the company’s own messaging.

As Bloisi put it: “We are just getting started.”