$TENCENT(00700)$'s largest shareholder$Naspers Ltd.(NPSNY)$, from South Africa, has been selling its stake since late June .
I sold out all my Tencent holdings immediately I heard about this plan. Reducing their holdings of a company with a market value of nearly 3 trillion yuan, brings liquidity impact to the whole Hong Kong stock market.$HSI(HSI)$
On September 8, Naspers announced that Prosus, a subsidiary of Naspers, would reduce its holdings of 1.115 million Tencent shares.The shareholding ratio fell to 27.99%. According to statistics, Naspers has reduced its holdings by over 3.9 million Tencent shares this year.
At the same time,An additional 192 million Tencent shares held by it were deposited in the Hong Kong Central Clearing and Settlement System in the form of vouchersThe latest market value of this part of the stock is close to HK $60 billion
Last week, I also calculated that Prosus's net assets closed at $161.5 billion on July 6, while PRX's secondary market gave a market value of only $137.6 billion, and the discount rate at that time was 14.8%. Therefore, the reality is that Naspers's repurchase did not bring confidence to the secondary market. In fact, the market is still willing to keep the discount all the time.
Naspers's effort in vain.
Here comes the question:
- The shareholder want to eliminate secondary market discounts
- The market is willing to keep the discount all the time
- How long will the major shareholders sell?
In the worst case, the major shareholders sold all Tencent shares in the secondary market.
If we sell 1.15 million shares a day at the current rate, and the major shareholders have a total of 2.769 billion shares,It is necessary to reduce its holdings for more than 2,400 trading days and continuously reduce its holdings for nearly 10 years.
At the same time, Tencent is still buying back. For example, on September 8, 1.16 million shares were repurchased through centralized bidding transactions, with a repurchase amount of HK $352 million, almost equal to the amount sold by major shareholders.
Does it sound like interest transfer?
Anyway, minority shareholders have already started complaining.
I personally do not support Tencent to buy back at this time.
From the balance sheet point of view, shareholders' equity (including Naspers' and other minority shareholders') is equal to the company's assets minus the company's liabilities. Tencent's repurchase is a part of cash and current assets. Tencent repurchased while selling in the secondary market of major shareholders,It means handing over the cash of the company's assets to one major shareholder, while other small and medium shareholders do not enjoy this part of the benefits.
Some people may say that all the shares repurchased by Hong Kong stocks should be written off, which will reduce the total share capital of the company and increase the value of remaining shareholders. However, even if the shares of major shareholders and the corresponding cash are deleted at the same time, it means that the non-current assets that are difficult to realize are left to minority shareholders, and there will be more discounts.
Therefore, it is not unreasonable to say that Tencent repurchase is an invisible transfer of benefits to major shareholders.
Of course, there are also minority shareholders who give Tencent an idea-reverse acquisition$Prosus NV(PROSY)$That is, Tencent uses its cash to reduce the discount of its major shareholders' own shares. In this wayThe advantage is that Tencent can still take a part of Naspers' shareholders' equity.Naspers holds Tencent again, and they cross-hold shares, which is a bit like a doll.The final result is that the cash item is partially moved to shareholders' equity, while diluting the equity of major shareholders and other minority shareholders.
In a word, Tencent, how to deal with this problem gracefully, has become the focus that investors expect.$Tencent Holding Ltd.(TCEHY)$
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