In today’s briefing:
- Sea Ltd’s (SE US) – Through the Looking Glass
- Sea Ltd 4Q22 Results: Can Profits Hold When Growth Stall?
- JD Health (6618.HK) – It’s Time to Reassess the Business Prospects and Valuation
- DPC Dash Pre-IPO – Refiled PHIP Updates – Growth Picking up Again
Sea Ltd’s (SE US) – Through the Looking Glass
- Sea Ltd’s 4Q2022 results were nothing short of spectacular, with the company booking a net profit more than a year ahead of expectations, underlining management’s ability to thrive in adversity.
- The company cut costs and most notably A&P spend on e-commerce but it still managed to grow GMV and booked positive adjust EBITDA for all its core Asian markets.
- Sea Ltd (SE US) now stands out well ahead of its peers on profitability and should trade at a premium but it will have to continue to execute.
Sea Ltd 4Q22 Results: Can Profits Hold When Growth Stall?
- Sea Ltd (SE US) shares went up by 22% yesterday as the company’s top-line beat consensus by 13% and recorded its first-ever operating profit of $342.9m (consensus: -$344m).
- Main growth drivers such as GMV, orders, Gaming active users and Gross-Bookings indicate that growth could stall. Meanwhile, competition is heating up, sidelining the importance of cost discipline in e-commerce.
- Turning unprofitable yet-again could be a hard thing to swallow, even for those firmly believing in Shopee. Therefore, Sea could fall a lot more than the previous-bottom next-time it falls.
JD Health (6618.HK) – It’s Time to Reassess the Business Prospects and Valuation
- JD Health’s dependence on direct sales business wouldn’t change. But the gross profit of prescription drugs is low. If JD Health increases its revenue proportion, overall gross margin would decline.
- The business supporting JD Health’s high growth in the future is more dependent on the second growth point, but we haven’t seen any new business with high certainty so far.
- The essence of JD Health’s business is “product sale e-commerce” rather than “a comprehensive online healthcare platform” at the current stage, which cannot support high valuation in our view.
DPC Dash Pre-IPO – Refiled PHIP Updates – Growth Picking up Again
- DPC Dash (1405 HK) aimed to raise around US$75m in its Hong Kong IPO in December. The company is now back with a revised PHIP which incorporates its FY22 performance.
- The company is the exclusive master franchisee for Domino’s Pizza in China, HK and Macau. DPC operated 562 stores across 13 cities, as of Nov 2022.
- In this note, we talk about the updates from its refiled PHIP.
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