MOTUS HOLDINGS LTD
Motus Holdings Ltd. (South Africa) is a holding company, which through its subsidiaries, engages in the provision of motor vehicle services. It operates through the following segments: Import and Distribution, Retail and Rental, Motor-Related Financial Services, and Aftermarket Parts. The Import and Distribution segment includes the sale of imported of international vehicle brands such as Hyundai, Kia, Renault and Mitsubishi. The Retail and Rental segment comprises of sale of new and used passenger and commercial vehicles, parts and after-sales servicing thereof. The Motor-Related Financial Services segment manages and administers service, maintenance and warranty plans for vehicles and develops and sells value added products. The Aftermarket Parts segment refers to the distributing, wholesaling and retailing of accessories and aftermarket parts. The company was founded on October 12, 2017 and is headquartered in Bedfordview, South Africa.
- Share price increase of 64% YTD.
- Currently 12.5% discount from previous high.
- Potential to buy at R86 per share in the short term (15% discount).
- Headline Earnings Per share R10 (2021) vs R3 (2020) prior period.
- Second half of 2021 is set to do well, which makes this share attractive at current price level.
- Meaningful cost savings and abolishment of internal inefficiencies, broad about by the need for restructuring during the beginning of the pandemic, seems to have meaningful impacts within the company balance sheet.
With the higher-than-expected GDP figure, for the first quarter of 2021, it seems like the South African consumer might be in a better state than expected. This trend is likely to continue with vaccine rollouts, and the re-opening of the economy as we move past the third wave. The Level 4 announcement came as a shock to the whole nation. Thus, a fair amount of overreaction must also be accounted for in share prices.
MULTICHOICE GROUP LTD
MultiChoice Group Ltd. engages in the provision of video entertainment platform. It operates through the following segments: South Africa, Rest of Africa, and Technology. The South Africa segment offers digital satellite television and subscription video-on-demand services in South Africa. The Rest of Africa segment delivers Direct to Home, Digital Terrestrial Television, and Over-the-Top services. The Technology segment includes digital platform and application security services. The company was founded in 1995 and is headquartered in Johannesburg, South Africa.
- One of the biggest market players in the sector.
- Long standing customer base.
- Kid’s entertainment division has shown significant growth since the beginning of the lockdown.
- Well positioned to benefit from consumer preferences changing to over the internet products.
- For the time-being the company is still predominantly making use of satellite TV as opposed to internet-based connections. This is mainly because South Africa has a major time-lag compared to first world countries due to our high data prices and limited connectivity.
- Most subscribers that signed on at the beginning of lockdown in March 2020 are still active subscribers, which lays a solid foundation from their retail market going forward
- As sporting events, especially rugby, returns to normal, it is forecasted that there will be a meaningful increase in the brand’s premium DStv packages.
It is very important to note that although there has been a number of new subscribers, the advertising revenue forgone by the complete shutdown of sporting events throughout 2020 has made it difficult for companies operating within this sector to show strong financial results. The loss of advertising revenue from the hospitality sector has also been quite severe. However, as the economy reopens and vaccine rollouts gain traction, we should see advertising revenue grow in line as international travel and sporting events commence.
Naspers Ltd. operates as Internet and media group. It operates through the following business segments: Classifieds, Food Delivery, Payments and Fintech, Etail, and Edtech. The company was founded on May 12, 1915 and is headquartered in Cape Town, South Africa.
- Currently Prosus and Naspers are trading at a 24% and 53% discount respectively given their holdings in the tech giant, Tencent Holdings Ltd.
- A successful restructuring of the business will unlock enormous potential for shareholders as the company aims to reduce the discount it is currently trading at.
- The proposed share swop will be 2.27443 Prosus shares for one Naspers share. At current prices, Naspers shareholders will get a bit of a premium if doing so.
- Ecommerce (Food Delivery) segment of the business is growing substantially
- Their target market consumer is in a much stronger financial state than local consumers.
- RISK: The current share swap vote is causing share prices to stagnate in the short term. In our opinion, any meaningful decline in the share price over the short term is a buying opportunity.
The fact that the non-Tencent part of Naspers is in a full swing growth phase shows how the acquiring of a lot of food delivery companies over time (even ore-Covid) is bearing fruits. Although the segment might still be relatively new to the company, the global pandemic has laid a solid foundation for Naspers and Prosus to build a customer base within these segments across the various countries they operate in. However, this share will remain high on the watchlist as we try to uncover what the company’s next move would be in terms of restructuring and reducing the discount at which it is trading compared to its underlying holdings in Tencent.
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