Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Event-Driven

<ul>
<li>Multiple new agencies have been reporting that <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a> plans to trim its investment portfolio over the remainder of the year. </li>
<li>The reports have been coming in since the second half of the year and the company has been duly denying these rumors.</li>
<li>In this note, we look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how.</li>
</ul>


Multiple new agencies have been reporting that Tencent (700 HK) plans to trim its investment portfolio over the remainder of the year. 
The reports have been coming in since the second half of the year and the company has been duly denying these rumors.
In this note, we look at Tencent’s shareholding in various companies to try and gauge which ones it could sell out of and how.


Tencent Investee Selldown - The US$120bn Global Overhang

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<ul>
<li>Sea's share price dropped 14% yesterday following its 2Q22 results as $2.9bn revenue ($3.0bn for consensus) and $659.4m operating loss excluding goodwill impairment ($594m for consensus) were weaker than expected.</li>
<li>After lowering the e-commerce revenue guidance by $400m in 1Q22, <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)'</a>s decision to suspend 2022 e-commerce revenue guidance in 2Q22 is an early indication of difficulties ahead.</li>
<li>Digital Entertainment's gross bookings are down another 10% QoQ in 2Q22, which indicates that Free Fire’s revenue and profitability could continue to go down during the second half of 2022.</li>
</ul>


Sea's share price dropped 14% yesterday following its 2Q22 results as $2.9bn revenue ($3.0bn for consensus) and $659.4m operating loss excluding goodwill impairment ($594m for consensus) were weaker than expected.
After lowering the e-commerce revenue guidance by $400m in 1Q22, Sea Ltd (SE US)'s decision to suspend 2022 e-commerce revenue guidance in 2Q22 is an early indication of difficulties ahead.
Digital Entertainment's gross bookings are down another 10% QoQ in 2Q22, which indicates that Free Fire’s revenue and profitability could continue to go down during the second half of 2022.


<ul>
<li>Consensus has revised down <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a>’s inflated estimates before 2Q22 earnings due on 16th August 2022.</li>
<li>These revised estimates are on the optimistic side as consensus still thinks that 1Q22 was just a one-off drop.</li>
<li>However, our analysis of Google Play and App Store data suggests that Sea Ltd’s gaming and e-commerce popularity has further deteriorated from the 1Q22 level.</li>
</ul>


Consensus has revised down Sea Ltd (SE US)’s inflated estimates before 2Q22 earnings due on 16th August 2022.
These revised estimates are on the optimistic side as consensus still thinks that 1Q22 was just a one-off drop.
However, our analysis of Google Play and App Store data suggests that Sea Ltd’s gaming and e-commerce popularity has further deteriorated from the 1Q22 level.


Sea Ltd: Reduced Consensus Is Still Optimistic

<ul>
<li>Consensus remains positive about <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> with 12.3% QoQ revenue growth in Q2 and a 32.2% revenue CAGR over the next two years.</li>
<li>However, with Free Fire losing active players and Shopee’s growth momentum in South East Asia broken, we expect a disappointing Q2 from Sea Ltd.</li>
<li>Free Fire is on its last legs and Shopee has decided to halt its geographic expansion. Thus we think that there’s significant downside to Sea’s Q2 and medium-term consensus.</li>
</ul>


Consensus remains positive about Sea Ltd (SE US) with 12.3% QoQ revenue growth in Q2 and a 32.2% revenue CAGR over the next two years.
However, with Free Fire losing active players and Shopee’s growth momentum in South East Asia broken, we expect a disappointing Q2 from Sea Ltd.
Free Fire is on its last legs and Shopee has decided to halt its geographic expansion. Thus we think that there’s significant downside to Sea’s Q2 and medium-term consensus.


Sea Ltd: Free Fire Is Losing Active Players And Shopee’s Growth Momentum Is Broken

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<ul>
<li>There has been a recent press commentary about <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd</a> laying off staff, which although unpleasant reflects management's decisive and pragmatic decision-making style which is no bad thing.</li>
<li>It is unclear how many staff are being laid off and where but it seems that Indonesia is not impacted in a big way and core markets continue to perform.</li>
<li>We will not follow on the coattails of liquidity with a negative recommendation when what management is doing looks positive and <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> is batting above its peers.</li>
</ul>


There has been a recent press commentary about Sea Ltd laying off staff, which although unpleasant reflects management's decisive and pragmatic decision-making style which is no bad thing.
It is unclear how many staff are being laid off and where but it seems that Indonesia is not impacted in a big way and core markets continue to perform.
We will not follow on the coattails of liquidity with a negative recommendation when what management is doing looks positive and Sea Ltd (SE US) is batting above its peers.


Sea Ltd (SE US) - Navigating Challenging Waters With Sails Set

Singapore

Sea Limited offers information technology services. The Company provides online personal computer and mobile digital content, e-commerce, and payment platforms. Sea serves customers worldwide.

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Sea (SE US)

Tencent Investee Selldown - The US$120bn Global Overhang

There have been multiple reports that Tencent (700 HK) plans to trim its investment portfolio over the remainder of the year. We look at Tencent's...

Sumeet Singh

Sea Ltd: Tough Times Ahead

After lowering the e-commerce revenue guidance by $400m in 1Q22, Sea Ltd (SE US)'s decision to suspend 2022 e-commerce revenue guidance in 2Q22 is...

Oshadhi Kumarasiri

Sea Ltd: Reduced Consensus Is Still Optimistic

The revised estimates are still on the optimistic side as consensus thinks Q1 was just a one-off and Sea would be able to get back to a QoQ growth...

Oshadhi Kumarasiri

Sea Ltd: Free Fire Is Losing Active Players And Shopee’s Growth Momentum Is Broken

While consensus is expecting a swift turnaround with a 12.3% QoQ revenue growth, our analysis points to another disappointing quarter for Sea Ltd...

Oshadhi Kumarasiri

Sea Ltd (SE US) - Navigating Challenging Waters With Sails Set

We will not follow on the coattails of liquidity with a negative recommendation when what management is doing looks positive and Sea Ltd (SE US) is...

Angus Mackintosh

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