Stock Watch - Stock Picks — Shoprite and Naspers

Gerbrand Smit from N-e-FG Fund Management chose Shoprite Holdings Ltd as his stock pick of the day and Jean Pierre Verster from Protea Capital Management chose Naspers

Smit said: "I'm going with Shoprite, it used to be expensive at 20 PE multiples it did not drop earnings for 20 years and now it's done so. It had a bad first number at -32% with problems in Africa with currency etc, it had security problems in South Africa and cost problems. The second half in the full year was actually up against the previous second half with about four or five percent so at R100 a share you are sitting with close to R9 a share earnings for next year, which puts that on a 12,5 to 13 PE multiple is where it's trading at the moment. We think for a long-term quality company and quality play in Africa it doesn't look bad."

Verster said "My pick is Prosus and it'll list tomorrow. The share code will be PR X and you can trade it separately from your Naspers. It is primary in in Europe on Euronext and secondary on the JSE. You will have those shares on the JSE if you are a South African resident you can trade them from nine o'clock. I like the Prosus bit so I wouldn't sell my Prosus I would hold on to it
(that's this is not taking tax into account) and I would even, depending on the price try and swap Naspers and sell Naspers and buy Prosus - depending on the discount so, if it's a similar 10%
to 15% discount between Naspers and Prosus and Prosus and its underlying, I'd much prefer Prosus. Also remember that Naspers is ex-div tomorrow so you need to add another seven rand for the dividend as well. So when you look at your portfolio and look at your Naspers price and your Prosus price at nine o'clock and it is less then what your Naspers price was today or yesterday don't worry, there's an extra seven rand of dividends as well. But, between the two bits my preference is for process and I think it can do quite nicely and it can significantly decrease the discounts relative to eat some of
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