Shopee parent Sea Group and Grab, Southeast Asia’ two largest listed tech platforms, both reported expectation-beating earnings yesterday (12 Nov 2024, Asia time). 

The capital market responded positively, sending both stock prices up by >10%. Year to date, Sea Group share price has risen by 180%, while Grab’s by 48%.

As usual, refer to analyst reports for detailed analyses of the financials, here are some of our thoughts:

      1. Competition for both companies remains ‘stable’ in Southeast Asia. We mentioned in our comments in the prior quarter that TikTok Shop’s adjustment period seemed to last significantly longer than we had anticipated.
        TikTok Shop is still growing but in a not-so-aggressive way. The uncertainty with the potential TikTok ban in the US might tie some of the management attention of ByteDance – although we still believe that TikTok Shop will not settle at their current market share in Southeast Asia;
      2. Grab’s leading position in pan-Southeast Asia ride hailing and food delivery platform markets is solid as well. The low cost players of ride hailing, which some investors feared, have not created a meaningful dent to Grab’s position. While for food delivery, do look out for Momentum Works Food Delivery Platforms in Southeast Asia 2025, to be released in Q1 next year.
      3. Sea Group reported a 29.4% YoY growth of Shopee’s quarterly “value-added services” to US$767.2 million. This is “consisting of revenues related to logistics services”. This shows that the investment in its in-house logistics arm SPX Express is paying off. In the earnings call, the management reiterated that more than 70% of Shopee’s orders are now delivered through SPX Express. This might be an understatement;
      4. J&T Express reported that its next biggest competitor in Southeast Asia (which for sure is SPX Express) had a parcel volume equivalent to 90% of J&T’s in the first half of 2024. Shopee’s gross order volume grew about 10% in Q3 compared to H1 2024. This means SPX Express’s actual parcel volume is already on par with J&T Express, and might have even overtaken the latter to be the
        largest ecommerce express player in Southeast Asia;
      5. Sea Money grew its loan book by a whopping 30% QoQ to US$4.6 billion. It seems that after a few years of cautious growth in the high interest environment, Southeast Asia’s largest digital consumer credit business is again stepping on its pedal. Its BNPL services increased credit limits for some users, and are now financing bigger ticket items both on and off the platform. Sales & marketing expenses for digital financial services grew by 160% YoY – bang for the buck;
      6. Grab’s loan book of US$498 million is still much smaller compared to Sea Group’s. We argued in the past that there was a lot of potential for Grab to tap into here. There are some nuances here – e.g. Grab’s users historically are more premium compared to Shopee, and a ride hailing platform had smaller user/transaction metrics compared to an ecommerce platform. Nonetheless, Grab does continue to expand its transacting user base (current MTU at 41.9 million) and offerings to various income segments, creating more opportunities for profitable digital financial services;
      7. Again back to competition and how to really understand these companies. We have mentioned many times in the past that Grab and Shopee are in a good position because 1) they are regional enough as each individual market might be too small; 2) they have nowhere else to retreat to if they fail in Southeast Asia; and 3) for the same reason and on the flip side, Chinese and international giants just historically have not been able to focus on Southeast Asia very well. As we argued in the book “Seeing the unseen: behind Chinese tech giants’ global venturing”, look at these factors: Leadership, People, Organisation and Product, in that order;
      8. One analyst asked in the Sea Group earnings call whether there is
        still room for profitable growth in Southeast Asia. The answer is obvious – look at the low penetration (e.g. Grab MTU – 5% of the region; Ecommerce<10% of total retail in Vietnam). The question is: who is executing to tap into that growth, how focused are they, and how much strategic patience do they have. 

Congratulations to the leadership, teams (and shareholders) of Sea Group and Grab.


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