Investment Research - Asia Consumer Sector, Investory

Devi Subhakesan

Investment Research - Asia Consumer Sector

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

Equity Bottom-Up

<ul>
<li>Welcome to Consumer Tales &amp; Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.</li>
<li>
<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea (SE US)</a> owned Shopee has partnered with YouTube to drive GMV growth and resist  competition with TikTok, which has strengthened its regional presence through its stake in Tokopedia,</li>
<li>India's strong shopping appetite was reflected in robust gold purchases in August and high demand for the iPhone 16 launched last week.</li>
</ul>


Welcome to Consumer Tales &amp; Trends, your weekly roundup of the latest corporate developments, investment reports and sector events in the consumer industry.

Sea (SE US) owned Shopee has partnered with YouTube to drive GMV growth and resist  competition with TikTok, which has strengthened its regional presence through its stake in Tokopedia,
India's strong shopping appetite was reflected in robust gold purchases in August and high demand for the iPhone 16 launched last week.


Weekly Consumer Tales: Shopee Youtube Tieup-China Home Price Slump-India's Rising Gold, Iphone Sales

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.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea (SE US)</a> has completed a full cycle of growth followed by a phase of profitability improvements/cost-cutting.</li>
<li>Although substantial cost reductions have been implemented, these efforts have mainly focused on fixed costs.</li>
<li>With marketing efficiency unchanged and significant improvements in gross margin difficult, the company appears no closer to achieving stable profitability than it initially was.</li>
</ul>



Sea (SE US) has completed a full cycle of growth followed by a phase of profitability improvements/cost-cutting.
Although substantial cost reductions have been implemented, these efforts have mainly focused on fixed costs.
With marketing efficiency unchanged and significant improvements in gross margin difficult, the company appears no closer to achieving stable profitability than it initially was.


Sea Ltd: No Nearer to Stable Profitability Than Before

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>
<a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd</a>'s 2Q2024 results reflected both the success of its bold strategies to drive growth in areas such as live-streaming whilst at the same time increasing take rates and profitability.</li>
<li>Its core focus on competitive pricing, content, logistics, and especially advertising will help to drive growth, retention, and profitability as unit economics improve, whilst it rolls out its lending products.</li>
<li>Competitive intensity has stabilised which should allow for take rates to rise higher, whilst Shopee is well positioned to further increase its lead. Valuations look reasonable given <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd's</a> profitable status.</li>
</ul>



Sea Ltd's 2Q2024 results reflected both the success of its bold strategies to drive growth in areas such as live-streaming whilst at the same time increasing take rates and profitability.
Its core focus on competitive pricing, content, logistics, and especially advertising will help to drive growth, retention, and profitability as unit economics improve, whilst it rolls out its lending products.
Competitive intensity has stabilised which should allow for take rates to rise higher, whilst Shopee is well positioned to further increase its lead. Valuations look reasonable given Sea Ltd's profitable status.


<ul>
<li>Looks like <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea (SE US)</a> decided to take a detour back to the land of losses this quarter.</li>
<li>But it's not a massive issue. They've maintained close to 7% QoQ revenue growth, so things should be okay.</li>
<li>Investors likely won't delve into the details further to uncover the substantial costs hidden behind that apparent growth.</li>
</ul>


Looks like Sea (SE US) decided to take a detour back to the land of losses this quarter.
But it's not a massive issue. They've maintained close to 7% QoQ revenue growth, so things should be okay.
Investors likely won't delve into the details further to uncover the substantial costs hidden behind that apparent growth.


Sea Ltd: A Detour Back to the Land of Losses

<ul>
<li>We suspect that the recent strength in <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea (SE US)</a>'s price performance is likely due to short covering, with shorts incentivized to cover after a nearly 38% gain.</li>
<li>As earnings approach, short positions have been increasing since late October, likely anticipating another earnings disappointment from Sea Ltd's Q3 report on November 14, 2023.</li>
<li>Consensus estimates for Sea Ltd are at their lowest since its inception. A modest outperformance could lead to a squeeze in short interest.</li>
</ul>


We suspect that the recent strength in Sea (SE US)'s price performance is likely due to short covering, with shorts incentivized to cover after a nearly 38% gain.
As earnings approach, short positions have been increasing since late October, likely anticipating another earnings disappointment from Sea Ltd's Q3 report on November 14, 2023.
Consensus estimates for Sea Ltd are at their lowest since its inception. A modest outperformance could lead to a squeeze in short interest.


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)

Weekly Consumer Tales: Shopee Youtube Tieup-China Home Price Slump-India's Rising Gold, Iphone Sales

Shopee (SE US) has partnered with YouTube to boost GMV and counter competition from TikTok, which has expanded its regional presence through its...

Devi Subhakesan

Sea Ltd: No Nearer to Stable Profitability Than Before

Sea (SE US) has gone through growth and cost-cutting phases, but struggles to achieve stable profitability due to unchanged marketing efficiency...

Oshadhi Kumarasiri

Sea Ltd (SE US) - Take Rate Tiger

Sea Ltd's 2Q2024 results reflected both the success of its bold strategies to drive growth in areas such as live-streaming whilst at the same time...

Angus Mackintosh

Sea Ltd: A Detour Back to the Land of Losses

Sea took a detour back to the land of losses this quarter. But it's not a massive issue. They've maintained close to 7% QoQ growth, investors...

Oshadhi Kumarasiri

Sea Ltd: Potential for a Short Squeeze

We find it unlikely that Sea will return to making losses in Q3, as projected by consensus. While cautious about medium-term projections, we...

Oshadhi Kumarasiri

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Weekly Consumer Tales: Shopee Youtube Tieup-China Home Price Slump-India's Rising Gold, Iphone Sales

Shopee (SE US) has partnered with YouTube to boost GMV and counter competition from TikTok, which has expanded its regional presence through its...

Devi Subhakesan

Sea Ltd: No Nearer to Stable Profitability Than Before

​Sea (SE US) has gone through growth and cost-cutting phases, but struggles to achieve stable profitability due to unchanged marketing efficiency...

Oshadhi Kumarasiri

Sea Ltd (SE US) - Take Rate Tiger

Sea Ltd's 2Q2024 results reflected both the success of its bold strategies to drive growth in areas such as live-streaming whilst at the same time...

Angus Mackintosh

Sea Ltd: A Detour Back to the Land of Losses

​Sea took a detour back to the land of losses this quarter. But it's not a massive issue. They've maintained close to 7% QoQ growth, investors...

Oshadhi Kumarasiri

Sea Ltd: Potential for a Short Squeeze

We find it unlikely that Sea will return to making losses in Q3, as projected by consensus. ​While cautious about medium-term projections, we...

Oshadhi Kumarasiri

Sea (SE US) has gone through growth and cost-cutting phases, but struggles to achieve stable profitability due to unchanged marketing efficiency...

Sea took a detour back to the land of losses this quarter. But it's not a massive issue. They've maintained close to 7% QoQ growth, investors...

We find it unlikely that Sea will return to making losses in Q3, as projected by consensus. While cautious about medium-term projections, we...