BROKERS’ NOTES: Buy Naspers, sell British American Tobacco

Nick Kunze, senior portfolio manager at Sanlam Private Wealth

Buy: Naspers

Naspers is a global consumer internet company. Through its majority-owned subsidiary Prosus, it operates and invests globally in markets with long-term growth potential. The group’s segments include food delivery, classifieds, payments and fintech, edtech, e-tail and other e-commerce. The investment case for Naspers centres on its successful transition from an investment holding company to a profitable operational powerhouse, primarily through Prosus. Naspers’s share price is down about 15% year to date, largely reflecting weakness in global technology stocks and sentiment towards Chinese tech. It’s important to note that the decline has not been driven by a deterioration in its underlying assets. Also key is that Naspers trades at a significant discount to the value of its underlying holdings. Tencent still dominates, but the non-Tencent assets are now becoming meaningful businesses. Historically, this has provided a good entry level to a high-quality business.

Sell: British American Tobacco

British American Tobacco (BAT) is a global multicategory consumer goods company that provides tobacco and nicotine products. Its segments include the US, Asia Pacific, the Middle East, Africa, the Americas and Europe. BAT has historically been a core holding in most portfolios looking for a solid cash-generative and decent dividend-paying business. With the stock at around R960, the share is now fully priced, trading at a forward earnings multiple of 12.2. In February, BAT released its preliminary financial 2025 results, reiterating its medium-term growth algorithm but guiding that 2026 performance is expected at the lower end of the range. FX is also expected to remain a modest headwind. Despite its defensive qualities, the sluggish growth outlook and high earnings multiple lead us to see better opportunities elsewhere in the market.