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

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

APAC IPOs & Placements, Aequitas Research

Ethan Aw

APAC 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.

Doosan Robotics  / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/doosan-robotics" target="_blank" data-smartkarma-citation="entities:36816:1" rel="noopener">Doosan Robotics (DOOSANROBO KS)</a> is looking to raise up to US$314m in its Korean IPO. </li>
<li>Doosan Robotics (DR) manufactures and sells collaborative robots (Cobots). The firm’s product portfolio primarily includes different series of robot arms as well as its coffee module. </li>
<li>In our previous notes, we looked at the company’s past performance and undertook a peer comparison. In this note, we talk about valuation.</li>
</ul>



Doosan Robotics (DOOSANROBO KS) is looking to raise up to US$314m in its Korean IPO. 
Doosan Robotics (DR) manufactures and sells collaborative robots (Cobots). The firm’s product portfolio primarily includes different series of robot arms as well as its coffee module. 
In our previous notes, we looked at the company’s past performance and undertook a peer comparison. In this note, we talk about valuation.


Doosan Robotics IPO - Thoughts on Valuation - A Punt at Best, a Crash at Worst

Singapore

Singapore Telecommunications Limited wireless telecommunication services. The Company offers diverse range of services including fixed, mobile, data, internet, TV,  and digital solutions. Singapore Telecommunications serves customers worldwide.

NetLink NBN Trust designs, builds, owns, and operates fiber network infrastructures. The Company offers fiber network resources, including ducts, manholes, and cables. NetLink NBN Trust also focuses on leasing telecommunication infrastructures to telecommunication service providers. NetLink NBN Trust serves customers in Singapore.designs, builds, owns, and operates fiber network infrastructures. The Company offers fiber network resources, including ducts, manholes, and cables. NetLink NBN Trust also focuses on leasing telecommunication infrastructures to telecommunication service providers. NetLink NBN Trust serves customers in Singapore.

StarHub Ltd. is a fully-integrated info-communication company offering a full range of information, communications, and entertainment services for both consumer and corporate markets in Singapore. The Company provides mobile network and multi-channel cable TV services, including high definition and on-demand services, as well as high-speed residential broadband services.

Digilife Technologies Limited Limited offers mobile telecommunication solutions. The Company provides a portfolio of voice, data and computing services along with VoIP technology. S 121 Ltd supports access from mobile devices through either mobile broadband (3G/4G) or WiFi.

Polaris Limited provides a wide range of telecommunications services. The Company's services services range from prepaid communication services to wholesale voice traffic.

Edition Ltd offers software and content for cellular telephones.  The Company offers software that allows for customized ring tones, personal voice mailbox, mobile karaoke, and other services.

World Wrestling Entertainment, Inc. operates as a media and entertainment company. The Company offers live wrestling events, television programming, music publishing, advertising, licensing, and home video streaming services. World Wrestling distributes its programs worldwide in various languages.

NetEase, Inc. is an Internet technology company that develops applications, services and other Internet technologies in China. The Company's core businesses consist of email service, web portal and online entertainment, including online gaming services. NetEase also offers online advertising, search, mobile applications and e-commerce.

Nintendo Co., Ltd. globally develops, manufactures and sells home-use video game hardware and software in home entertainment business.  The company also produces home-game products including cards.

Roku, Inc. designs and manufactures consumer electronic products. The Company offers wireless enabled devices that stream audio and video content from the internet to home entertainment systems. Roku serves customers globally.

Endeavor Group Holdings, Inc. operates as a holding company. The Company, through its subsidiaries, offers entertainment content, as well as specializes in marketing and licensing, representation, and event management. Endeavor Group Holdings serves customers worldwide.

HYBE Co., Ltd. operates as an entertainment company. The Company provides music production, album distribution, entertainers management, publicity, planning, training, and other services. HYBE also makes television shows.

Kunlun Tech Co., Ltd. offers comprehensive Internet value-added services. The Company focuses on social network interactive and online game fields. Kunlun Tech also provides localized translation outsourcing and agency advertising services.

Bilibili Inc. provides online entertainment services. The Company offers a platform that covers a wide array of genres and media formats, including videos, live broadcasting, mobile games, animation, and comics. Bilibili serves customers in China.

China Ruyi Holdings Limited operates as a holding company. The Company, through its subsidiaries, focuses on online streaming video and internet community businesses. China Ruyi Holdings also manufactures and sells photographic, electronic, and multimedia accessories.

37 Interactive Entertainment Network Technology Group Co.,Ltd designs, develops, and operates mobile games and web games. The Company also provides game promotion, customer service, top-up payment, and other services. 37 Interactive Entertainment Network Technology Group conducts its businesses in China.

37 Interactive Entertainment N (002555 CH)

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

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

Doosan Robotics IPO - Thoughts on Valuation - A Punt at Best, a Crash at Worst

Doosan Robotics (DOOSANROBO KS) is looking to raise up to US$314m in its Korean IPO. comparison. In this note, we talk about valuation.

Ethan Aw

Price Gauge

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

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

Doosan Robotics IPO - Thoughts on Valuation - A Punt at Best, a Crash at Worst

Doosan Robotics (DOOSANROBO KS) is looking to raise up to US$314m in its Korean IPO. comparison. In this note, we talk about valuation.

Ethan Aw