IPO and L/S equity, 2015 Starmine top stock picker, Global Equity Research Ltd

Rickin Thakrar

IPO and L/S equity, 2015 Starmine top stock picker

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Bottom-Up

<p>Sea limited reported 4Q20 results on Tuesday before the US market open. Sea generated another quarter of triple-digit growth while sporting a robust balance sheet. Our new estimates imply further strong growth in 2021. Moreover, Sea announced a decision to invest in vertical businesses through an investment management arm – we believe to enhance its payments business. We believe this is not dissimilar to the <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent Holdings (700 HK)</a> operating model with its tremendous success in its payments business. Our thoughts on this and the latest results are below.</p>

Sea limited reported 4Q20 results on Tuesday before the US market open. Sea generated another quarter of triple-digit growth while sporting a robust balance sheet. Our new estimates imply further strong growth in 2021. Moreover, Sea announced a decision to invest in vertical businesses through an investment management arm – we believe to enhance its payments business. We believe this is not dissimilar to the Tencent Holdings (700 HK) operating model with its tremendous success in its payments business. Our thoughts on this and the latest results are below.

Sea Limited 4Q Results: Angling to Be the Next Tencent?

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.

<p>Singapore based internet company, <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> released its 4Q20 results yesterday, which saw revenue increase by 102% YoY and 29% QoQ to $1,567m (consensus $1,467m). The company’s operating loss was up 55.4% YoY and 17.0% QoQ to $357.3m, compared to the consensus operating loss estimate of $392.0m. (an OPM of -22.8% compared to OPMs of -29.6%, -37.4%, -42.3% and -25.2% in 4Q19, 1Q20, 2Q20 and 3Q20 respectively)</p><p>Consensus projects Sea’s 2021 operating loss to narrow from $1,303m in 2020 to $791m by 2021. However, with the deteriorating marginal profitability in e-commerce and fintech businesses and the expansion of Phoenix Labs, we believe the company’s losses could expand in 2021.</p>

Singapore based internet company, Sea Ltd (SE US) released its 4Q20 results yesterday, which saw revenue increase by 102% YoY and 29% QoQ to $1,567m (consensus $1,467m). The company’s operating loss was up 55.4% YoY and 17.0% QoQ to $357.3m, compared to the consensus operating loss estimate of $392.0m. (an OPM of -22.8% compared to OPMs of -29.6%, -37.4%, -42.3% and -25.2% in 4Q19, 1Q20, 2Q20 and 3Q20 respectively)Consensus projects Sea’s 2021 operating loss to narrow from $1,303m in 2020 to $791m by 2021. However, with the deteriorating marginal profitability in e-commerce and fintech businesses and the expansion of Phoenix Labs, we believe the company’s losses could expand in 2021.

Sea Ltd: Unlikely to Halve Losses Amidst E-Commerce and Fintech Growth

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

<div class="content-highlight">
<p><a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> released a set of what can be described as blowout 4Q2020 and FY2020 results, with +103% growth YoY in total GAAP revenues in 4Q2020, +111% growth in total GAAP Digital Entertainment Revenues, and a spectacular +178% YoY growth in e-commerce revenues for 4Q2020. What was also highly encouraging was the company's guidance for FY2021, which seems well-ahead of analyst expectations, which will likely need to play catch up.</p>
</div>
<p>The digital entertainment business saw a continued growth of its user base both in terms of quarterly active users and quarterly paying active users.</p>
<p>Bookings for the digital entertainment business were US$1bn, up +111% whilst adjusted EBITDA came in at US$663.5m, up by +149.1% YoY.</p>
<p>The company's self-developed game <em>Free Fire </em>was the most downloaded mobile game globally in 2020, maintaining its pole position for the second year running.</p>
<p>In the e-commerce business, the company registered a +135% growth in gross orders to 1,0233.2m and +113% growth in gross merchandise orders (GMV) to US$11.9bn.</p>
<p><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 also seeing increasing adoption of its Sea Money offerings with its mobile wallet generating US$2.9bn in transaction value in 4Q2020 and 23.2m quarterly paying users.</p>
<p><a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> has also acquired a 100% stake in Composite Capital Management, a Hong Kong licensed global investment management firm founded and led by David Ma. This will effectively become an incubator for the company's investments.</p>
<p>The company has also recently appointed Dr Yan Shuicheng as its Chief Science Officer to build and lead Sea AI Labs. He is a leading expert in developing artificial intelligence, with a key focus on computer vision, machine learning, and multimedia analysis.</p>
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<section class="figure">For FY2021 guidance, the company is expecting significant sales growth for both digital entertainment and e-commerce, which suggests numbers significantly above current analyst expectations.</section>


Sea Ltd (SE US) released a set of what can be described as blowout 4Q2020 and FY2020 results, with +103% growth YoY in total GAAP revenues in 4Q2020, +111% growth in total GAAP Digital Entertainment Revenues, and a spectacular +178% YoY growth in e-commerce revenues for 4Q2020. What was also highly encouraging was the company's guidance for FY2021, which seems well-ahead of analyst expectations, which will likely need to play catch up.

The digital entertainment business saw a continued growth of its user base both in terms of quarterly active users and quarterly paying active users.
Bookings for the digital entertainment business were US$1bn, up +111% whilst adjusted EBITDA came in at US$663.5m, up by +149.1% YoY.
The company's self-developed game Free Fire was the most downloaded mobile game globally in 2020, maintaining its pole position for the second year running.
In the e-commerce business, the company registered a +135% growth in gross orders to 1,0233.2m and +113% growth in gross merchandise orders (GMV) to US$11.9bn.
Sea Ltd (SE US) is also seeing increasing adoption of its Sea Money offerings with its mobile wallet generating US$2.9bn in transaction value in 4Q2020 and 23.2m quarterly paying users.
Sea Ltd (SE US) has also acquired a 100% stake in Composite Capital Management, a Hong Kong licensed global investment management firm founded and led by David Ma. This will effectively become an incubator for the company's investments.
The company has also recently appointed Dr Yan Shuicheng as its Chief Science Officer to build and lead Sea AI Labs. He is a leading expert in developing artificial intelligence, with a key focus on computer vision, machine learning, and multimedia analysis.



For FY2021 guidance, the company is expecting significant sales growth for both digital entertainment and e-commerce, which suggests numbers significantly above current analyst expectations.

Sea Ltd (SE US) - Metamorphosis in Motion

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.

Equity Capital Markets

<p>Coupang, one of the largest product e-commerce players in Korea, aims to raise up to US$3.6bn in its US listing via a mix of selling primary and secondary shares. In this note, we’ll talk about the lock-up, index inclusion and run the deal through our framework.</p><div><p>Coupang offers its 14.8m customers a wide range of owned-inventory selection. In addition, on its marketplace it also offers millions of SKUs sourced from over 200,000 merchants. Apart from normal e-commerce operation, it also provides its customers with: grocery offering, Rocket Fresh; logistics food delivery offering, Coupang Eats; and digital financial services, Coupang Pay.</p></div><div><p>I've covered various aspects of the deal in my earlier insights: </p></div><div><ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/coupang-pre-ipo-the-positives-fast-growth-sticky-customers" target="_blank" rel="noopener">Coupang Pre-IPO - The Positives - Fast Growth, Sticky Customers</a>, </li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-the-negatives-horrendous-data-disclosures-including-no-mention-of-ott-launch" target="_blank" rel="noopener">Coupang Pre-IPO - The Negatives - Horrendous Data Disclosures, Including No Mention of OTT Launch</a></li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-fair-bit-of-competition-but-it-s-doing-better-than-most-local-peers" target="_blank" rel="noopener">Coupang Pre-IPO - Fair Bit of Competition but It’s Doing Better than Most Local Peers</a></li>
<li><a href="https://www.smartkarma.com/insights/coupang-pre-ipo-earnings-forecast-and-valuation" target="_blank" rel="noopener">Coupang Pre-IPO - Earnings Forecast and Valuation</a></li>
</ul></div>

Coupang, one of the largest product e-commerce players in Korea, aims to raise up to US$3.6bn in its US listing via a mix of selling primary and secondary shares. In this note, we’ll talk about the lock-up, index inclusion and run the deal through our framework.Coupang offers its 14.8m customers a wide range of owned-inventory selection. In addition, on its marketplace it also offers millions of SKUs sourced from over 200,000 merchants. Apart from normal e-commerce operation, it also provides its customers with: grocery offering, Rocket Fresh; logistics food delivery offering, Coupang Eats; and digital financial services, Coupang Pay.I've covered various aspects of the deal in my earlier insights: 

Coupang Pre-IPO - The Positives - Fast Growth, Sticky Customers, 
Coupang Pre-IPO - The Negatives - Horrendous Data Disclosures, Including No Mention of OTT Launch
Coupang Pre-IPO - Fair Bit of Competition but It’s Doing Better than Most Local Peers
Coupang Pre-IPO - Earnings Forecast and Valuation


Coupang IPO - Momentum Play, Unequal Lock-Up, Index Inclusion

Private Capital Markets

GoTo Gojek Tokopedia Tbk PT / Private Capital Markets

<p><a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> just had a vote of confidence in its digital financial strategy, with GIC (Singapore's Sovereign Wealth Fund) revealing that it will invest in <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a>, where Gojek recently increased its own stake to 22.16%. </p>
<p>GIC will invest around US$225m to acquire circa 9% stake in <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a> through a rights issue to take place in March.</p>
<p>The Indonesian bank is already in the process of transforming itself into a digital bank but bringing in GIC as a shareholder will bring comfort in terms of governance of the bank, as well as obviously bringing new funds.</p>
<p><a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a> will secure IDR7tn or US$497.3m through the issuance of new shares, increasing its total capital to IDR8tn or US$564.4m.</p>
<p>The potential customer base for <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a> will be even larger assuming the Gojek-Tokopedia merger goes through, opening up Tokopedia's customers and sellers as potential customers. </p>
<p><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 not standing still on digital finance in Indonesia and has recently acquired a local bank Bank BKE, which has been renamed SeaBank, which we also discuss below. <a href="https://www.smartkarma.com/entities/sea-ltd" target="_blank" data-smartkarma-citation="entities:8509:1" rel="noopener">Sea Ltd (SE US)</a> probably represents the most serious potential competitive threat for <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a>.</p>
<div class="content-highlight">
<p>Valuations for the merged <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek (1379371D IJ)</a> and <a href="https://www.smartkarma.com/entities/tokopedia-pt" target="_blank" data-smartkarma-citation="entities:24239:1" rel="noopener">Tokopedia PT (1087142D IJ)</a> have crept up to US$35bn-US$40bn and no doubt an early success with <a href="https://www.smartkarma.com/entities/bank-jago-tbk-pt" target="_blank" data-smartkarma-citation="entities:31094:1" rel="noopener">Bank Jago Tbk PT (ARTO IJ)</a> will help it command a higher multiple on the listing of the combined entity. </p>
</div>

Gojek (1379371D IJ) just had a vote of confidence in its digital financial strategy, with GIC (Singapore's Sovereign Wealth Fund) revealing that it will invest in Bank Jago Tbk PT (ARTO IJ), where Gojek recently increased its own stake to 22.16%. 
GIC will invest around US$225m to acquire circa 9% stake in Bank Jago Tbk PT (ARTO IJ) through a rights issue to take place in March.
The Indonesian bank is already in the process of transforming itself into a digital bank but bringing in GIC as a shareholder will bring comfort in terms of governance of the bank, as well as obviously bringing new funds.
Bank Jago Tbk PT (ARTO IJ) will secure IDR7tn or US$497.3m through the issuance of new shares, increasing its total capital to IDR8tn or US$564.4m.
The potential customer base for Bank Jago Tbk PT (ARTO IJ) will be even larger assuming the Gojek-Tokopedia merger goes through, opening up Tokopedia's customers and sellers as potential customers. 
Sea Ltd (SE US) is not standing still on digital finance in Indonesia and has recently acquired a local bank Bank BKE, which has been renamed SeaBank, which we also discuss below. Sea Ltd (SE US) probably represents the most serious potential competitive threat for Bank Jago Tbk PT (ARTO IJ).

Valuations for the merged Gojek (1379371D IJ) and Tokopedia PT (1087142D IJ) have crept up to US$35bn-US$40bn and no doubt an early success with Bank Jago Tbk PT (ARTO IJ) will help it command a higher multiple on the listing of the combined entity. 


Gojek (1379371D IJ) - A Leg Up for Digital Finance?

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 4Q Results: Angling to Be the Next Tencent?

Sea limited reported 4Q20 results on Tuesday before the US market open. Sea generated another quarter of triple-digit growth while sporting a...

Rickin Thakrar

Sea Ltd: Unlikely to Halve Losses Amidst E-Commerce and Fintech Growth

Consensus projects Sea’s 2021 operating loss to narrow from $1,303m in 2020 to $791m by 2021. However, with the deteriorating marginal...

Oshadhi Kumarasiri

Sea Ltd (SE US) - Metamorphosis in Motion

Sea Ltd continues to achieve higher than expected rates of growth both for its digital entertainment and e-commerce business, with digital...

Angus Mackintosh

Coupang IPO - Momentum Play, Unequal Lock-Up, Index Inclusion

Coupang aims to raise up to US$3.6bn in its US listing via selling primary and secondary shares. In this note, we’ll talk about the lock-up, index...

Sumeet Singh

Gojek (1379371D IJ) - A Leg Up for Digital Finance?

The move by GIC to invest in Bank Jago represents a vote of confidence in Gojek's digital financial strategy and places it ahead of its competitors...

Angus Mackintosh

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