BusinessDayTV Sep 18, 2026
With Izak Van Niekerk, Portfolio Manager at Merchant West · Chantal Marx, Head of Investment Research at FNB Wealth and Investments
Tencent trades at roughly 10 times earnings once its international investments are stripped out, Izak Van Niekerk said, against at least double that for some American hyperscalers.
The usual explanation for the gap is Chinese risk. Van Niekerk's is narrower: Tencent has raised its spending on artificial intelligence without yet showing a return, and the market has responded by paying nothing for the AI case at all.
"Yes, I think the market's not pricing much for it at the moment."
Van Niekerk is a Portfolio Manager at Merchant West with more than 15 years in investments and a chartered accountant; Chantal Marx heads investment research at FNB Wealth and Investments. They took viewer questions on seven JSE-listed names and then each gave a pick.
The full episode is covered here so you can skip it.
Here are the 9 arguments that matter.
Key Takeaways
Anglo American's re-rating into a copper miner depends on the Teck merger completing, with a large special dividend due before it closes and only Chinese regulatory approval outstanding
FirstRand's weakness is stock-specific: the UK business is an overhang while the market waits to see the price and what the proceeds fund
Investors give Standard Bank's African growth a lower value than its South African growth, because of currency and inflation uncertainty
Credit loss ratios have not ticked up across the South African banks, which is the number Van Niekerk is watching
Tencent sits near 10 times earnings excluding its international stakes, against at least double for some US hyperscalers
The AI case rests on an agent inside WeChat, which he calls a path to monetization from 1.4 billion users
Naspers trades at a wider discount than Prosus because it is a holding company of a holding company, and the gap has widened again
Sasol is an oil trade its management does not control, with Trump saying a Middle East resolution is unlikely before November
The two picks: Valterra, for holding capital spending flat while peers raise it, and Remgro at close to a 40% discount to net asset value
1. Anglo's Copper Pivot
Asked what the market is pricing into Anglo American's commodity outlook, Marx said one of the three businesses is getting all the attention.
Copper is the story the market is buying
Well, it does seem as if the market is focusing a lot more on the copper story and I think that is a function of what is happening in terms of the AI thematic and then also other additional thematics that will be supportive of copper in the long term like renewable energy for example and really that is where the focus is right now.
Chantal Marx
The other two are harder to read. Diamonds remain in flux, she said, and iron ore is close to unreadable.
Iron ore is not priced, it is guessed at
On the iron ore side it's very very difficult at the moment to see what the market is ascribing there exactly it's also a difficult market to predict a lot of it depends on global growth a lot of it depends on Chinese growth and there we have had some uncertainty of late
Chantal Marx
The thing that changes the whole picture, she added, is that Anglo is in the middle of a merger with Teck Resources, which shifts where the focus sits. Van Niekerk named that merger as the catalyst for the share. It is guided for the fourth quarter of this year or the first of next, and only Chinese regulatory approval is outstanding.
The payment comes before the deal closes
Once that gets approved, they'll pay out a very large special dividend pre-merger.
Izak Van Niekerk
The end state he described is a business whose earnings come almost entirely from copper, with a small contribution from the zinc assets arriving with Teck and from Kumba Iron Ore.
The re-rating is conditional on completion
So to complete this rerating into an attractive growth prospect copper miner they need this merger to complete and it looks like they will be getting there in the next 6 months.
Izak Van Niekerk
2. FirstRand's UK Overhang
Asked whether FirstRand's recent weakness is a sector move or specific to the stock, Marx separated the share price from the business. Share prices across the banks have diverged, she said, while most of them have shown decent underlying operational momentum. FirstRand's problem is its British bank, Aldermore.
Progress on the exit is not the same as certainty
There has been some progress made in terms of getting to a place where they can actually divest from that jurisdiction.
Chantal Marx
What the market is waiting for
But I think that the market is actually in wait and see mode around what type of price will they be able to get for that asset.
Chantal Marx
The second unknown is what happens to the money: an internal use, or a cash return to shareholders.
Uncertainty alone explains the underperformance
And because it's in flux, you will naturally see a little bit of an underperformance there.
Chantal Marx
Asked what he is watching on credit growth, margins and rates going into results, Van Niekerk said the banks already build a rate view into their guidance, and pointed at FirstRand's own numbers.
The growth rate in the guidance
still guiding to single digit to low double digit earnings growth which you could translate into still growing about 10% next year which is a little bit slower than what they did last year
Izak Van Niekerk
That is a better place to be exposed to the domestic economy than the retailers, which he described as under considerable pressure.
But the exit still has to happen
So that's preference to be in the banks and obviously their execution on the UK exit is important because that numbers looked really good if you exclude the UK but they need to get that exit done.
Izak Van Niekerk
3. Standard Bank in Africa
On what is driving sentiment towards Standard Bank at current levels, Van Niekerk pointed past the domestic result.
The South African result is not the variable
I think they had very good South African results. But the key thing would be continuous performance of the African franchise.
Izak Van Niekerk
Standard Bank is the incumbent across the continent, he said, and Absa and Nedbank are trying to build the same thing through acquisitions.
The condition attached to the African case
So as long as African currencies hold up that should be a continued good performer and they also on the recent results had no changes in their guidance.
Izak Van Niekerk
Marx agreed that most of the growth comes from outside South Africa, and explained why the market does not pay the same price for it.
Two kinds of growth, two valuations
So I think when investors are looking at the Standard Bank story, they are cognizant of the fact that most of the growth is probably going to come from the rest of the continent, but they don't necessarily value it the same way as they would growth in South Africa.
Chantal Marx
Currency uncertainty is the first reason, she said, and inflation in particular jurisdictions the second, because both change the local economics and the results once translated into rand. On the franchise itself she corrected her own hedge.
She upgraded the claim mid-sentence
Well they definitely not probably have the strongest portfolio in terms of the South African banks when we look outside of South Africa.
Chantal Marx
4. The Banks' Medium Term
Asked for a medium-term view on South African banking given the volatility already discussed, Van Niekerk conceded the direction of rates and then said it is already in the numbers.
Rising rates are a known input
Yeah, look, a rising interest rate environment would obviously add to some pressure, but as I said before, they take that into account in the guidance.
Izak Van Niekerk
The number that would change his mind has not moved.
Bad debts are still inside the banks' own bands
They're all within their bands of what they expect. So credit remains decent.
Izak Van Niekerk
Holding that is the whole outlook, he said, in an environment where oil prices and inflation are pressuring the consumer.
5. Prosus Needs the Rump
Asked what could unlock more value in Prosus, Marx said the largest part of the answer is not Prosus at all: Tencent is still the biggest driver of the value, so a return of investor interest in Chinese technology lifts the share indirectly. The part the company controls is the food delivery business.
The test is whether Latin America transfers
when we're looking at the food delivery strategy the success that they've had in Latin America translating into a similar success in Europe as well as in other areas where they are exposed to that space
Chantal Marx
Sustained positive free cash flow from the businesses outside Tencent is what she expects to narrow the discount, and she framed it as a matter of time rather than of a single event.
6. Tencent at 10x Earnings
Asked how much of the valuation is now being driven by artificial intelligence and the wider technology investment cycle, Van Niekerk agreed with Marx that Tencent dominates the case, and named the specific product.
What the agent is being tested on
which is essentially a path to monetization from 1.4 billion users
Izak Van Niekerk
The agent is being tested inside Weixin, the Chinese version of WeChat. The reason the market has not paid for it is the absence of proof.
Spending has risen, returns have not shown
So I think the pressure has been that they've increased spending on AI but haven't showed real evidence of return on investment there
Izak Van Niekerk
American peers have shown accelerating cloud cash flow and operating cash flow, he said, and he expects Tencent to get there but thinks it has to deliver before the market pays for it. Asked directly whether the market underestimates AI as a growth engine for the business, he said it does.
His answer was unhedged
Yes, I think the market's not pricing much for it at the moment.
Izak Van Niekerk
And the multiple he compared it against
is closer to 10 times earnings where it's at least double that in some of the hyperscalers
Izak Van Niekerk
Marx took the other side of the risk, on China. Advertising demand depends on business health, which depends on the economy.
It is a consumer stock first
It is ultimately a consumer facing stock.
Chantal Marx
The counterargument she put to herself
But you can also then argue that businesses will spend on advertising when they're not necessarily getting feet in the door.
Chantal Marx
That gives the advertising line a countercyclical element, she said, and WeChat's place in daily Chinese life makes the business more defensive than the label suggests. Her conclusion was about perception rather than fundamentals.
What is actually depressing the rating
At least the perception is there that they're in a jurisdiction that's seeing slowing growth with very serious challenges facing the consumer and that is depressing the rating.
Chantal Marx
7. Naspers' Widening Gap
Asked whether the discount to underlying assets is still the issue for Naspers, Marx said the chain of ownership is the reason it is larger.
Two layers of holding company, two discounts
And for Naspers because it's a holding company of a holding company it'll ultimately also have a slightly bigger discount and that is where the investor focus is going to be.
Chantal Marx
And the direction it has moved
Now what we've seen more recently is that the discount has widened
Chantal Marx
Momentum in Chinese internet stocks would narrow it again, she said, as would execution on the businesses outside Tencent. Both Naspers and Prosus are still buying back shares, which is the one lever they control directly.
Van Niekerk explained the widening as a reversal of a promise that had been kept. The companies sold investors on improving profitability outside Tencent, delivered it, and watched the discount narrow, then guided to higher spending on food delivery.
The market read the new spending as a step back
At the moment the markets are seeing the increasing spending and saying that the rump is maybe not as profitable as they expected.
Izak Van Niekerk
Asked what the key catalyst is over the next 12 months, Marx named the two places the money is going. The first is defending iFood's market share in Brazil.
The competition is pricing below cost
where they have had two very low cost competitors entering the market and by low cost I mean unsustainable unrealistic kind of delivery margins
Chantal Marx
Those entrants are spending heavily per order to pull customers onto their own platforms, she said, which leaves Prosus no choice.
The spending is not optional
They have to invest to defend.
Chantal Marx
The second is the recent acquisition in European food delivery.
The acquired business is still shrinking
which is an acquisition that they recently made and is still seeing its ecosystem losing customers losing order volumes and they have to turn that around
Chantal Marx
The catalyst arrives, on her account, when there is confirmation that the Brazilian spending is defending and growing the business and that the money going into Just Eat Takeaway is not being thrown after bad.
8. Sasol Is an Oil Trade
Asked what the market is most concerned about at Sasol, Van Niekerk said the concern is about something management cannot influence.
The share price is not in the company's hands
Yeah, I think unfortunately it's not under their control. It's mostly driven by the oil price and the continued conflict we're seeing in Iran.
Izak Van Niekerk
A resolution looks distant, and he cited the American president on the timing.
The political timetable he pointed to
Even Trump admitting that it's unlikely that they'll have a resolution before his midterm elections in November.
Izak Van Niekerk
The supply question is whether rebel attacks keep interrupting Middle Eastern volumes, and the most recent news cuts the other way.
The repair that could come early
So the recent press over the last couple of days has been Saudi Arabia talking about repairing the East West pipeline that they're piping some of their product instead of sending it through the strait so that repairs could be done quicker than expected.
Izak Van Niekerk
He then named the self-limiting mechanism in a high oil price.
High prices cure themselves eventually
And I guess the concern is also in a world where interest rates are rising due to inflation caused by the oil prices that we will get some demand destruction eventually in oil which would also bring prices down.
Izak Van Niekerk
Marx answered on the balance sheet, which has been the question mark at Sasol for years.
A higher oil price pays down the debt
I think a higher oil price and higher energy prices generally will be quite supportive of their deleveraging strategy.
Chantal Marx
A sustained recovery in chemical prices would help too, she said, and the reverse of each is equally true: a Middle East resolution, a return of the chemicals supply glut, or demand destruction in oil would all hurt. She added a constraint that has nothing to do with prices.
The input risk is gas from Mozambique
One of the other things that we must also just remember with Sasol is that ultimately these guys need quality feed stock in order to execute their technology and actually deliver what they need to deliver to the market.
Chantal Marx
Which is why she says the share is choppy
They are sensitive to a lot of factors outside of their control as well.
Chantal Marx
9. Valterra and Remgro
Van Niekerk's pick is Valterra Platinum, and he was explicit that it is a relative call within platinum group metals rather than a call on the sector.
The industry is spending the windfall
So if we don't have a continuously rising basket price, the free cash flows and share prices of these companies will go backwards
Izak Van Niekerk
Producers reported recently, he said, and the higher basket prices are going into higher capital spending while unit costs are also rising. Valterra is the one doing neither.
Costs are flat on last year
If you look at their cost guidance, it's essentially no increase on last year or very little.
Izak Van Niekerk
And the capital budget has not moved
They're maintaining their capital expenditure guidance.
Izak Van Niekerk
The others are spending more, he said, which reduces the cash reaching shareholders.
Marx picked Remgro, an investment holding company, on a near-term catalyst that she said also works as a longer hold and as diversification. Results are due on Monday, and the guidance on headline earnings per share was positive, though she said that is not the measure for this kind of company, where net asset value is. She expects positive movement in net asset value and in earnings from the unlisted holdings, Mediclinic among them: it is reducing its Swiss exposure in favor of a larger stake in faster-growing South Africa, with Middle Eastern exposure unchanged. Heineken's South African business has turned profitable, and the parent company has described its momentum as positive.
Cash at the center could come back to shareholders
So there's potential for decent shareholder returns cash returns near term.
Chantal Marx
And the price she is paying for it
And on top of it the stock is trading at close to a 40% discount net asset value and even if you put a 30% liquidity discount on the unlisted investments probably in the high 20%.
Chantal Marx
Bonus Insights
Three of the seven names on the show were versions of the same question. Prosus, Naspers and Tencent are one chain of ownership, and both guests answered on all three by working back to Tencent's multiple and forward to whether the businesses outside it can fund themselves.
Neither guest picked one of the seven names they had just discussed. Van Niekerk went to platinum group metals and Marx to an investment holding company, and both framed the choice as relative rather than as a view on a sector or a commodity.
The show's producer noted the schedule on air: Stock Watch pre-records on Mondays and Wednesdays and runs live on Tuesdays and Thursdays, while Stock Watch This Week is live on Friday lunchtimes.
The bottom line from both is that the JSE's large caps are waiting on events rather than earnings: a merger approval at Anglo American, a disposal price at FirstRand, proof of return on AI spending at Tencent, a Middle East resolution at Sasol. The two positions they would take now are the platinum producer holding its capital budget flat and the holding company trading 40% below its assets.
Products, Companies & Tools Mentioned
Anglo American (The market is paying for copper, cannot price iron ore and treats diamonds as unresolved; the re-rating needs the merger to close)
Teck Resources (The merger counterparty, guided to complete this quarter or next, with Chinese regulatory approval outstanding and a large special dividend before it)
Kumba Iron Ore (Part of the residual earnings in Anglo's end state, alongside the zinc assets arriving with Teck)
FirstRand (Guiding to single-digit to low-double-digit earnings growth, with Aldermore and the UK exit the overhang on the share)
Standard Bank (The incumbent African franchise; no change to guidance, and growth outside South Africa valued at a discount to growth inside it)
Absa and Nedbank (Named as the banks trying to build an African franchise through acquisitions)
Prosus (Tencent is still the dominant value driver; the discount narrows when the businesses outside it fund themselves)
Tencent (Near 10 times earnings excluding international stakes, testing an AI agent inside Weixin aimed at 1.4 billion users)
Naspers (A holding company of a holding company, so a wider discount than Prosus; both are buying back shares)
iFood (The Brazilian delivery business Prosus is defending against two entrants pricing at what Marx calls unsustainable delivery margins)
Just Eat Takeaway (The recent European acquisition still losing customers and order volumes, which she says has to be turned around)
Sasol (An oil price trade management does not control, with Mozambican gas feedstock as a separate constraint)
Valterra Platinum (Van Niekerk's pick: flat cost guidance and an unchanged capital budget while peers spend the windfall)
Remgro (Marx's pick: close to a 40% discount to net asset value, results due Monday, cash at the center)
Mediclinic (The unlisted holding she expects to lift Remgro's net asset value, shifting from Switzerland towards South Africa)
Heineken (Its South African business has turned profitable, and the parent has described momentum as positive)
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