Prosus N.V.'s Capital Markets Day: A Catalyst to Unlock NAV Upside and Ecommerce Synergies

Prosus N.V. (AMS:PRX) is preparing to host its 2025 IGNITE Capital Markets Day (CMD) on June 25th in London, an event that could mark a pivotal moment for the company's valuation. Investors have long debated Prosus's persistent discount to its net asset value (NAV), which has lingered at around 30-40% despite its ownership of 29% of Tencent (HKEX:700) and a sprawling global e-commerce ecosystem. This CMD, focused on strategies to drive profitable growth and enhance transparency, presents a critical opportunity to re-rate the stock. Here's why the event could unlock significant upside for shareholders.

The NAV Discount Conundrum

Prosus's undervaluation relative to NAV has been a long-standing issue. While the company's share price has struggled, its core assets—including stakes in food delivery giant Delivery Hero, payments platform PayU, and a 29% holding in Tencent—have continued to grow. The disconnect between Prosus's market cap and its NAV is often attributed to a lack of clarity around its fragmented portfolio, governance concerns, and skepticism about its ability to monetize synergies across regions.

The June 25 CMD aims to address these concerns by providing stakeholders with a clear roadmap for unlocking value.

Buybacks Funded by Tencent: Closing the NAV Discount Gap

Prosus's share buyback program, which has already repurchased €2.2 billion worth of shares since 2021, is a cornerstone of its NAV discount mitigation strategy. The program is uniquely funded by the proceeds from gradual Tencent share sales, ensuring it doesn't dilute the company's most valuable asset.

Critically, the CMD will likely reaffirm management's commitment to this buyback strategy. With Tencent's stock price up 25% year-to-date (as of June 2025), Prosus now has even greater flexibility to repurchase shares aggressively. This could accelerate the narrowing of its NAV discount, which stood at ~35% as of Q1 2025.

Accelerating Ecommerce EBIT Growth: Proof of Operational Turnaround

Prosus's recent financial performance suggests its core e-commerce businesses are finally delivering on their growth potential.

• Ecommerce revenue grew 21% YoY, outpacing industry peers.
• Adjusted EBIT hit $443 million, a significant jump from $276 million in 2022.
• Free cash flow surged by $513 million, reflecting improved operational efficiency.

These metrics are a stark contrast to the company's earlier struggles with losses in its regional e-commerce platforms. The turnaround is driven by a strategic focus on regional ecosystem synergies—leveraging data and cross-service intelligence to optimize user engagement. For example, in India, its food delivery platform Swiggy is now integrated with Paytm's payments network, creating a “super app” effect.

Dividend Increases Signal Confidence in Cashflows

Prosus's 59% rise in core headline earnings per share and a doubling of dividends (to €0.50 per share annually) underscore management's confidence in its cash-generating capacity. These moves are a vote of confidence in the company's ability to sustain buybacks while rewarding shareholders.

Investors should note that Prosus's dividend yield now exceeds 4%, a compelling return for a growth-oriented tech conglomerate.

The AI-Driven Ecosystem Play: Prosus's Unappreciated Advantage

Prosus's true moat lies in its AI-first approach to its global technology ecosystem. The company's platforms—including food delivery (DoorDash, Delivery Hero), payments (PayU), classifieds (OLX), and travel (e.g., Mascus)—generate vast amounts of proprietary data. This data is being used to build cross-service intelligence, improving user retention and monetization.

Moreover, its venture arm, Prosus Ventures, is making strategic bets in frontier technologies such as AI, robotics, drones, and synthetic biology (synbio). These investments, often overlooked by investors focused on short-term NAV metrics, could become critical drivers of future growth.

What to Expect at the CMD: A Roadmap to Re-Rating

The June 25 CMD will likely provide granular details on three key areas:

1. Regional Ecosystem Strategies: Leadership will outline how Prosus intends to deepen synergies in its three core regions (Europe, India, Latin America). For example, how its Latin American food delivery network (iFood) could integrate with mobility services.
2. AI and Data Integration: Executives may share metrics on how AI-driven optimizations are boosting EBIT margins—such as reduced delivery costs or higher order frequency.
3. Buyback and Dividend Plans: A reaffirmation of the buyback program's scale and timeline, alongside dividend growth guidance.

The event's emphasis on transparency—through live Q&A sessions and detailed slides—should help dispel investor skepticism about Prosus's ability to execute its strategy.

Investment Considerations: Risks and the Case for Buy

Risks to Consider:
- Tencent Dependency: Prosus's NAV is heavily tied to Tencent's stock price, which could face regulatory or macroeconomic headwinds.
- Execution in High-Growth Markets: Scaling e-commerce ecosystems in regions like India and Latin America requires navigating regulatory and competitive challenges.

Why the CMD Could Overcome These Risks:
- The event's focus on regional operational metrics (e.g., user growth, EBIT margins) will provide tangible evidence of execution.
- The buyback program's continued progress reduces the need for Prosus to rely solely on NAV multiples for revaluation.

Investment Thesis:
Prosus trades at a ~35% discount to NAV despite demonstrating clear progress in its e-commerce turnaround and dividend growth. The CMD offers a catalyst to close this gap by showcasing:
1. A coherent vision for its regional ecosystems.
2. The scalability of its AI-driven synergies.
3. A disciplined buyback/dividend strategy.

Recommendation:
For investors seeking a leveraged play on global e-commerce growth and undervalued tech assets, Prosus offers compelling upside. The CMD is a must-watch event; those who participate could gain clarity on a stock that's long been misunderstood.

Final Take: Prosus's CMD is more than a routine investor update—it's a chance to reposition the company as a leader in AI-driven e-commerce ecosystems, not just a Tencent satellite. For those willing to look beyond NAV multiples, this could be the start of a re-rating story.

Note: Always conduct your own research and consult a financial advisor before making investment decisions.