Earnings point to growing riches in SEA while China takes back seat

Opening Bell 🔔 is Tech in Asia’s free newsletter, which brings you the biggest news and latest trends around publicly listed Asian tech companies. [Read from your browser]( Opening Bell 🔔 Welcome to the Opening Bell! Delivered every Monday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and latest trends on Asia’s publicly listed tech companies. If you’re not a subscriber, get access by [registering here](. Hello {NAME} If [recent optimism in Southeast Asia]( wasn’t enough to convince wary investors of the region’s potential, the latest quarterly results of Grab (GRAB, NDAQ) and Sea Group (SE, NYSE) will go a long way towards turning doubters into believers. While there is no sugarcoating how the share prices of Singapore’s tech darlings collapsed amid broader market struggles in recent months, last week’s knockout earnings reports could be the catalyst for a much-needed change in fortunes for Sea and Grab. Grab shares rose by as much as 32% after the super app forecasted a rebound in its ride-hailing and food delivery businesses. The company, which operates in eight Southeast Asian countries, has been boosted by the reopening of economies in the region, with first quarter revenue [rising 6%](. Grab’s ride-hailing business, which was affected by a pandemic-induced lull in several markets, is now seeing a recovery as offices reopen, while the firm expects its delivery segment's adjusted core earnings to break even by the end of 2023. See also: [Grab’s financial health in 9 charts]( Meanwhile, Sea’s shares climbed by about 13% after posting a smaller-than-expected quarterly loss and beating quarterly sales estimates, aided by the strength of its ecommerce business, Shopee. The company, which also operates fintech arm SeaMoney and gaming unit Garena, said that its ecommerce revenue [grew 64.4%]( in Q1. Image credit: Timmy Loen Moving from one side of the spectrum to the other, we turn our focus to China, whose tech firms have been feeling the strain of an economic slump, Covid-related lockdowns, and heightened regulatory scrutiny. Despite those hurdles, ecommerce juggernaut JD.com (JD, NDAQ) posted [an 18% jump]( in quarterly revenue as more people shopped on its platform following recent lockdowns in the world’s second-largest economy. Initial investor optimism, which boosted JD.com shares by as much as 9%, was wiped out after the firm’s CEO called for caution during a post-earnings call, citing expected logistical disruptions and sluggish consumption. Furthermore, JD.com swung to a loss of nearly half a billion US dollars from a profit of US$535.5 million in the same quarter in 2021. Chinese smartphone maker Xiaomi (1810, HKG) [repeated the trick]( by reporting a loss of 530.7 million yuan as Covid-19 outbreaks in Hong Kong and Shanghai disrupted shipments. Matters are even worse for China’s most valuable tech company: Tencent (0700, HKG). The WeChat operator’s Q1 profit halved as it posted its slowest quarterly revenue growth [since 2004](. The Hong Kong stock index posted its worst performance in over two weeks as shares of the Shenzhen-based firm - its largest constituent - fell 7%. The world's biggest video game company, whose stock has halved from its peak in 2021, however, does have something to look forward to. The Chinese government recently resumed licensing new video games, ending a freeze that was imposed in July last year. It is worth noting that none of the newly licensed games came from Tencent. -- Shravanth 4 STOCKS TO WATCH Hot stocks, earnings reports, restructuring, activist investor pressure, and more. We feature the stocks that are likely to make big moves during the week. Bukalapak's office / Photo credit: Bukalapak 🇮🇩 Bukalapak (BUKA, IDX): It’s been a stellar week for this ecommerce behemoth, with its shares soaring nearly 15% and back to hovering near its IPO price. Going local is something right up Bukalapak’s alley, and it appears that the firm has doubled down on that strategy following the acquisition of as many as 10 local consumer brands. In [this premium piece]( Tech in Asia explores how Bukalapak’s US$100 million ecommerce roll-up play could nudge it towards profitability. 🇨🇳 Pinduoduo (PDD, NYSE): Temasek has been put through the wringer, but the Singapore state investor continues to steadfastly stand by its investments in China, having [upped its stake]( in ecommerce marketplace Pinduoduo. Temasek incurred at least US$532 million of erosion in the value of American depositary shares in 10 Chinese companies during the first three months of the year. Overall, the value of its portfolio [fell]( by about US$4 billion from the end of 2021. 🇮🇳 One 97 Communications (PAYT, NSE): The parent company of digital payments provider Paytm has seen its tough ride on public markets become worse last week. The firm took [more than a 99%]( hit in value to its Paytm E-commerce business after Alibaba (BABA, NYSE) and Ant Financial left the venture. The exits will see Paytm Mall’s value drop to US$13 million from US$3 billion. To compound the misery, Paytm’s deal to buy Raheja QBE General Insurance was [terminated]( nearly two years after the acquisition was first announced. 🇭🇰 Prenetics (PRE, NDAQ): The company, known for its Covid-19 testing services, last week became the first Hong Kong-based unicorn [to list]( on Nasdaq following a merger with blank-check firm Artisan Acquisition Corp. Prenetics will raise upward of US$260 million in a SPAC deal that values the firm at US$1.3 billion. 3 MARKET WHISPERS A lot more reliable than whispers, we highlight engaging source-based reporting from reputable news outlets around the globe. Image credit: Timmy Loen 1️⃣ Nip in the bud: Citing market volatility, Carousell has [pulled the plug]( on going public through a SPAC merger with L Catterton Asia Acquisition (LCAA, NDAQ). This comes after months of the blank-check company conducting due diligence on Carousell for the deal. The Singapore-based online marketplace and L Catterton ended talks as a rocky stock market made it difficult for the pair to agree on a private investment in public equity. See also: [Org Chart: The people leading Carousell]( 2️⃣ Another acquisition in sight: Byju’s acquisition spree is still going strong, and the Indian edtech unicorn is now making [admiring glances]( at Chegg (CHGG, NYSE), a California-based online tutoring company that has a market capitalization of US$2.2 billion. Additionally, Byju’s CEO stated when the firm does go ahead with an IPO - likely in the next nine to 12 months - it would be through a special purpose acquisition company. Byju’s was previously in talks with at least three SPACs to go public via a merger. 3️⃣ Fight for 5G supremacy: Celcom Axiata Bhd (AXIA, KLSE), DiGi Telecommunications (DSOM, KLSE), Maxis (MXSC, KLSE) and U Mobile - Malaysia's four largest telecommunications companies - are eyeing majority ownership in a state 5G agency, [fending off a proposal]( by the government to offer them a minority stake. The telco players also seek a review of the agency’s pricing model and network access plan. The objections could result in delays as the government aims to end discussions by the end of June. VIDEO Why are SPACs so popular now? Why the interest in Southeast Asia? And are SPACs here to stay or are they just another bubble waiting to burst? In this #TIAexplains episode, we answer everything you need to know about the trend around SPACs and more. [Sign up]( to watch for free! 2 EYE-POPPING FACTS Tech in Asia scours the internet to bring you the head-turning numbers from the world of business. Image credit: 123rf.com - [5.01%]( - That is the size of the stake that Saudi Arabia's Public Investment Fund (PIF) has taken in Kyoto-based gaming firm Nintendo (7974, TYO). The sovereign wealth fund, which manages more than US$600 billion, has been venturing deeper into the gaming industry. PIF has also taken stakes in video game companies Nexon (3659, TYO), Capcom (9697, TYO), and Koei Tecmo (3635, TYO). - [US$1 billion]( - That is the valuation at which data intelligence platform Near will become a public company following a merger with SPAC firm KludeIn I Acquisition (INKA, NDAQ). It will be traded on the Nasdaq under the ticker NIR. The deal is expected to generate US$268 million in gross proceeds. THE 1 YOU DIDN'T SEE COMING We spotlight the unusual, not-your-everyday kind of story that has got everyone talking and social media buzzing over the past week. Lows, zombies, and a change of heart? Image credit: Timmy Loen India had no new unicorns in April - the first month that it hit zero in over a year. Plunging Indian tech stocks and fears over corporate governance practices have made investors jittery, and now ​​they’re intensifying due diligence efforts. This has halted the unprecedented growth of the country’s startup ecosystem and could give rise to [zombie unicorns](. An investor described them as unicorns with no business models that have suspended hiring - “they are not dying, but will become irrelevant.” Heading back into the public sphere, Hong Kong‘s new listings volume [dropped]( 90% to a nine-year low this year as China‘s sharp economic downturn and its regulatory drive dampen the city’s prospects as a go-to market for IPOs. While the drying up of listings will hurt investment banks, this banking major is now claiming the [worst is over]( for China’s tech stocks, just a month after deeming them “uninvestable.” That’s it for this edition - we hope you liked it! Not your cup of tea? You can unsubscribe from this newsletter by going to our preference center at the bottom of this email. Happy investing and see you next week! Disclaimer: This content is for informational purposes only. Kindly do not construe any such information as legal, tax, investment, financial, or other advice. [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. You can also break our hearts and remove yourself from all Tech in Asia emails over [here](. Copyright © 2022 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894