China/Asia TMT

Shawn Yang

China growth and global non-US Internet equities

Blue Lotus Research Institute

Blue Lotus Research is a Hong Kong Type 4 Licensed investment advisory firm focusing on Chinese growth equities and global non-US Internet equities

Equity Bottom-Up

<ul>
<li>Sea reported CY2Q23 top-line that missed consensus by 3.4%, while non-GAAP net income beat  by 16%. Sea guided for the net margin to turn negative again in future quarters.</li>
<li>We see deterioration of Sea’s competitive landscape as a long-term trend, hence we cut TP to US$35. The next swing factor is Temu’s ASEAN launch.</li>
<li>Yet, we need to remind investors that Sea’s 3Q earning might have some upside, including user growth of Shopee, as well as stabilization of gaming metrics.</li>
</ul>


Sea reported CY2Q23 top-line that missed consensus by 3.4%, while non-GAAP net income beat  by 16%. Sea guided for the net margin to turn negative again in future quarters.
We see deterioration of Sea’s competitive landscape as a long-term trend, hence we cut TP to US$35. The next swing factor is Temu’s ASEAN launch.
Yet, we need to remind investors that Sea’s 3Q earning might have some upside, including user growth of Shopee, as well as stabilization of gaming metrics.


[Sea Limited (SE US, SELL, TP US$35) Target Price Change]: Long-Term Headwinds Amid Upsides in 3Q

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>While our outlook for <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea (SE US)</a>'s 2Q23 was bearish, we didn't anticipate such a substantial price reaction post-earnings, considering the existing low consensus.</li>
<li>However, the market appears to have given more importance to the revenue miss and the deterioration of fundamentals in e-commerce, as indicated by the post-earnings price reaction of -28.7%.</li>
<li>Shopee's modest profitability, restrained growth fail to warrant an EV surpassing $7.0bn. The Gaming business is best valued around $3.0bn, while the Fintech arm should be valued at around $5.0bn.</li>
</ul>


While our outlook for Sea (SE US)'s 2Q23 was bearish, we didn't anticipate such a substantial price reaction post-earnings, considering the existing low consensus.
However, the market appears to have given more importance to the revenue miss and the deterioration of fundamentals in e-commerce, as indicated by the post-earnings price reaction of -28.7%.
Shopee's modest profitability, restrained growth fail to warrant an EV surpassing $7.0bn. The Gaming business is best valued around $3.0bn, while the Fintech arm should be valued at around $5.0bn.


Sea Ltd: Share Price Approaching Its Rightful Destination

<ul>
<li>We remain bearish on <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea (SE US)</a> leading upto Q2 results on 15th August 2023.</li>
<li>Our analysis suggests Sea Ltd could hit around $3.25bn revenue in 2Q23, in line with consensus. However, profitability could fall short of consensus expectations.</li>
<li>Nonetheless, any downside stemming from a minor earnings shortfall could be rather limited given the existing low consensus and the lackluster price performance leading up to the Q2 earnings announcement.</li>
</ul>


We remain bearish on Sea (SE US) leading upto Q2 results on 15th August 2023.
Our analysis suggests Sea Ltd could hit around $3.25bn revenue in 2Q23, in line with consensus. However, profitability could fall short of consensus expectations.
Nonetheless, any downside stemming from a minor earnings shortfall could be rather limited given the existing low consensus and the lackluster price performance leading up to the Q2 earnings announcement.


Sea Ltd 2Q23: Revenue Should Align with Consensus, Profitability a Puzzle

Fintech & EM-focused Analyst, KT Capital Group

Alec Tseung

Fintech & EM-focused Analyst

KT Capital Group

Principal investments and advisory firm that focuses on connecting the CIS countries with East Asia.

Principal investments and advisory firm

<ul>
<li>
<a href="https://smartkarma.zoom.us/rec/share/greN_IcTNbNIKfXkLUrkLPlmSXvDzuNh6Oad7iFT39LMx6BL5WsQXTLHfLErBwPT.Xt9FLCjm5WkeCCsj" target="_blank" data-smartkarma-citation="insights:131779" rel="noopener">A recent Smartkarma Corporate Webinar | iFAST: Stellar Performance of Singapore's Global Fintech Player</a> introduced one of the few Fintech players in Asia that has been making profits since 2011.</li>
<li>The successful launch of its HK ePension platform can be highly scalable and is expected to be an important growth driver for the company in 2024 and 2025. </li>
<li>IFast Global Bank is expected to break even in Q4 this year and to be an important growth driver for the group's next 3-year plan (2025 and beyond). </li>
</ul>
<p><em>This Insight is part of the Smartkarma Corporate Webinar series, supported by SGX through the Investor Education Fund.</em></p>



A recent Smartkarma Corporate Webinar | iFAST: Stellar Performance of Singapore's Global Fintech Player introduced one of the few Fintech players in Asia that has been making profits since 2011.
The successful launch of its HK ePension platform can be highly scalable and is expected to be an important growth driver for the company in 2024 and 2025. 
IFast Global Bank is expected to break even in Q4 this year and to be an important growth driver for the group's next 3-year plan (2025 and beyond). 

This Insight is part of the Smartkarma Corporate Webinar series, supported by SGX through the Investor Education Fund.

IFast: A Profitable Fintech Player that Deserves More Investor Attention

Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Capital Markets

J&T Global Express  / Equity Capital Markets

<ul>
<li>In this insight, we examine <a href="https://www.smartkarma.com/entities/j-t-global-express-co-ltd" target="_blank" data-smartkarma-citation="entities:36819:1" rel="noopener">J&amp;T Global Express (1936374D CH)</a>'s operation in SE Asia, where it's the region's dominant player, with market share of 22.5% by volume </li>
<li>We profile SE Asian demand and supply and compare these to the development of China's express industry, acknowledging the key role <a href="https://www.smartkarma.com/entities/alibaba-group-holding-ltd" target="_blank" data-smartkarma-citation="entities:787:1" rel="noopener">Alibaba (ADR) (BABA US)</a> has played there</li>
<li>We also present a framework for estimating the value of J&amp;T's SE Asian operation by identifying the most appropriate comps and EV valuation multiples</li>
</ul>


In this insight, we examine J&amp;T Global Express (1936374D CH)'s operation in SE Asia, where it's the region's dominant player, with market share of 22.5% by volume 
We profile SE Asian demand and supply and compare these to the development of China's express industry, acknowledging the key role Alibaba (ADR) (BABA US) has played there
We also present a framework for estimating the value of J&amp;T's SE Asian operation by identifying the most appropriate comps and EV valuation multiples


J&T Global Express Pre-IPO, Part 2: SE Asia Operation | Demand, Supply Profiles | Valuation Approach

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)

[Sea Limited (SE US, SELL, TP US$35) Target Price Change]: Long-Term Headwinds Amid Upsides in 3Q

We see deterioration of Sea’s competitive landscape as a long-term trend, hence we cut TP to US$35. The next swing factor is Temu’s ASEAN launch.

Blue Lotus Research Institute

Sea Ltd 2Q23: Revenue Should Align with Consensus, Profitability a Puzzle

Any downside stemming from a minor earnings miss could be rather limited given the existing low consensus and the lackluster price performance...

Oshadhi Kumarasiri

IFast: A Profitable Fintech Player that Deserves More Investor Attention

iFast Corporation is one of the few Fintech players in Asia that has been consistently making net profits since as early as 2011. It operates in...

Alec Tseung

J&T Global Express Pre-IPO, Part 2: SE Asia Operation | Demand, Supply Profiles | Valuation Approach

We're pulling this insight out of the archives in light of J&T's updated filing and its decision to begin pushing forward with its IPO in Hong Kong...

Tracking Traffic

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52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

[Sea Limited (SE US, SELL, TP US$35) Target Price Change]: Long-Term Headwinds Amid Upsides in 3Q

We see deterioration of Sea’s competitive landscape as a long-term trend, hence we cut TP to US$35. The next swing factor is Temu’s ASEAN launch.

Blue Lotus Research Institute

Sea Ltd: Share Price Approaching Its Rightful Destination

Given that shares were down as much as 28.7% yesterday, there could be some upside to Sea Ltd shares, as we are expecting some shorts to cover....

Oshadhi Kumarasiri

Sea Ltd 2Q23: Revenue Should Align with Consensus, Profitability a Puzzle

Any downside stemming from a minor earnings miss could be rather limited given the existing low consensus and the lackluster price performance...

Oshadhi Kumarasiri

IFast: A Profitable Fintech Player that Deserves More Investor Attention

iFast Corporation is one of the few Fintech players in Asia that has been consistently making net profits since as early as 2011. It operates in...

Alec Tseung

J&T Global Express Pre-IPO, Part 2: SE Asia Operation | Demand, Supply Profiles | Valuation Approach

We're pulling this insight out of the archives in light of J&T's updated filing and its decision to begin pushing forward with its IPO in Hong Kong...

Tracking Traffic