Given Tencent (HKSE:00700)’s key position in Naspers’ business, examining Tencent’s operations more closely is worthwhile. Tencent is led by Chinese entrepreneur Ma Huateng, also known as Pony Ma. The company’s messaging app WeChat has 700 million users and is the leading social media website in China. In addition, Tencent is one of the world’s largest video gaming companies with such popular games as League of Legends, CrossFire and Dungeon Fighter Online as well as an 84% stake in one of the world’s leading mobile video gaming companies Supercell. In addition, Tencent has built a highly desirable portfolio of strategic investments in other leading Internet companies such as e-commerce company JD.com, U.S. video game leader Activision Blizzard, China’s ride-sharing leader Didi Chuxing, and classified ads leader 58.com. Through our investment in Naspers we are effectively investing in Tencent at a 15% discount and paying 23 times 2017 owner earnings for a company growing revenues and earnings at 25% to 30% a year.
From David Global Fund Semi-Annual Review 2016.
