GoTo soars where SEA peers falter

Opening Bell 🔔 is Tech in Asia’s free newsletter that brings you the biggest news and latest trends around Asia’s publicly listed 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} Running my eyes over last week’s inflation data and the earnings of major banks has left a lump in my throat - the kind that leaves one befuddled and speechless. For starters, JPMorgan Chase (JPM, NYSE) suspended share buybacks to prepare for credit losses in the face of a worsening macroeconomic climate. When the world’s most valuable bank takes drastic measures to protect itself against the growing risks of a recession, you know that the near-term economic future is looking somewhat bleak, at the very least. However, there are some industries that excel amid tough macro conditions. Consumer staples, healthcare, education, defense, and utilities are some of the sectors considered recession-proof, but loss-making tech firms that pin hopes of profitability on rapid growth tend to perform poorly as economies shrink. We’ve already seen public markets punish stocks like these. Shares of Grab (GRAB, NDAQ) and PropertyGuru (PGRU, NYSE) have been hit hard, falling around 75% and 50%, respectively, since making their market debuts. Meanwhile, Shopee-owner Sea Group (SE, NYSE) has shed more than 70% of its market value over the last year. That begs the question: Why has GoTo Group (GOTO, IDX) been spared the market’s wrath? While the company’s stock has been incredibly volatile, its value hovers around its IPO price. Could it be that GoTo got its IPO plans spot on by listing on the local Indonesian Stock Exchange, which has outperformed its global peers? That’s unlikely to be the case, given locally-listed Bukalapak’s (BUKA, IDX) struggles. The ecommerce giant, which is a homegrown brand like GoTo, is down more than 70% since its IPO in 2021. In this week’s Big Story, Tech in Asia crunches the numbers and dissects the charts to unravel the mystery behind the significant premium attached to GoTo’s valuation and what that means for the tech giant’s future. -- Shravanth  --------------------------------------------------------------- THE BIG STORY [Does GoTo deserve to trade at 6x Grab's valuation?]( GoTo’s shares are trading at a significant premium to its peers, supported by projected strong revenue growth. But future returns may be more muted.  --------------------------------------------------------------- 3 TRENDS TO KEEP AN EYE ON Hot stocks, earnings reports, restructuring, pressure from activist investors, and more. 1️⃣ Southeast Asian giants lured by riches in the West: Listing on US markets seems to be the running theme among Southeast Asia’s tech behemoths. Indonesian giants GoTo and Bukalapak are notable exceptions, but Sea, Grab, PropertyGuru, and Gogoro (GGR, NDAQ) all had their IPOs in US markets and are likely to be joined by more. For instance, Singapore-based digital telco Circles Life is in [talks to merge]( with Peter Thiel’s [SPAC]( Bridgetown Holdings (BTWN, NDAQ). The combined entity could have a valuation of between US$1.5 billion and US$2.5 billion. Bridgetown has previously attempted mergers with Tokopedia and Traveloka, but neither deal panned out.  Read more: [Why Traveloka may have been wise to give up SPAC route](  Meanwhile, VinFast, the electric vehicle unit of Vietnam’s biggest conglomerate, Vingroup (VIC, HM), has offset the impact of delaying its [US-bound IPO]( to next year by [raising US$4 billion]( to finance its expansion plans in the US. It [ramped up]( expansion efforts by opening six showrooms in California and bagging US$1.2 billion in incentives from North Carolina - the state's biggest-ever economic incentive package - to build a manufacturing facility. 2️⃣ Warnings, fines, investigations and falling valuations: Remember not too long ago when it looked like China’s tech giants were turning a corner. The now-delisted Didi had its apps restored and the regulatory ire appeared to have toned down enough for talks of reviving Ant Group’s IPO. But the celebrations seem to have been premature as significant roadblocks still lay ahead. Last week, China's ministry of transport warned Didi and Full Truck Alliance (YMM, NYSE) and two other firms about [unfair practices](. Meanwhile, Alibaba (BABA, NYSE) and Tencent (0700, HKG) continue to draw the ire of regulators. Both tech giants were [fined]( for failing to follow anti-monopoly rules regarding the disclosure of transactions. Meanwhile, gaming titles from Tencent and rival NetEase (NTES, NDAQ) continue to be overlooked, with [none]( from the two featuring in China’s third batch of approved new games this year.  See also: [20 largest exits in China](  Even at a company level, things aren’t looking pretty, with Nio (NIO, NYSE), one of China’s largest EV makers, [fighting fraud allegations]( and launching an independent investigation while Alibaba [laid off 30%]( of its investment team. 3️⃣ South Korea’s largest telco unfazed by crypto crisis: Three Arrows founders [going off the grid]( Celsius’ [bankruptcy]( Vauld’s [moratorium]( and Hodlnaut's [potentially seismic exposure]( to the Terra collapse are the latest additions to this week’s crypto meltdowns. But none of that was enough to stop SK Telecom (017670, KRX) from diving headfirst into the industry by [launching a digital crypto wallet]( for its users. On the other hand, South Korean major Hana Bank (086790, KRX) is diversifying its business while sticking to its roots. The Seoul-headquartered firm [will dip its toes]( in a new quick-credit service and unsecured credit loan feature through Line Bank, a joint venture between its Indonesian unit and Japan’s Line. The features will be available to customers in Bandung, Surabaya, and the Greater Jakarta area. Indonesia’s red-hot digital banking race appears to be rubbing off on its neighboring countries. Case in point: Bank Islam Malaysia (BIMB, KLSE) is now [set to officially launch]( its digital banking app this month, aiming to acquire 400,000 users in the next 12 months.  Deep dive: [Pleasant surprise in Malaysia’s digibank race](  ---------------------------------------------------------------  2 EYE-POPPING FACTS Tech in Asia scours the internet to bring you head-turning numbers from the world of business. - [US$4 billion]( - That’s how much Alibaba slashed the valuation of Freshippo, a Chinese grocery retailer owned by the tech giant. Freshippo will look to raise up to US$500 million from external investors at a valuation of US$6 billion, down from US$10 billion, due to China’s Covid-19 restrictions. - [US$8 billion]( - Taiwan Semiconductor Manufacturing (2330, TPE), the world's largest contract-chipmaker and a major Apple Inc (AAPL, NDAQ) supplier, posted an astonishing 76.4% year-over-year rise to secure record profits in the second quarter. The stellar results calmed fears over a looming chip glut by underscoring the resilient demand in the sector. --------------------------------------------------------------- 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. Twitter and Musk take battle to court, and Google slows hiring It was almost as if the market could tell something just wasn’t right with Elon Musk’s US$44 billion deal to acquire Twitter (TWTR, NYSE). Since the announcement in April, the microblogging platform’s shares have traded well below the agreed buying price of US$54.20 per share for long stretches - an indication that investors weren’t convinced the deal would get over the line. Fast forward to July, and it seems the market’s prediction is likely to come true: Twitter [sued]( Musk last week for violating the deal to buy the social media firm and asked a court to order the world's richest person to honor the agreement. Musk claims Twitter violated the terms of the deal by failing to respond to requests for information regarding fake or spam accounts on the platform - data that is fundamental to its business performance. Furthermore, the saga has put the Tesla (TSLA, NDAQ) and SpaceX CEO in [hot water]( with the US securities regulator again. We’ve already documented how even the largest firms are bracing themselves for a looming economic downturn. Last week, we highlighted how and why Facebook owner Meta Platforms (META, NDAQ) slashed the number of engineers it wants to hire this year. This week, Alphabet (GOOGL, NDAQ), the parent company of Google, also said it plans to slow the pace of [hiring]( for the rest of the year as decades-high inflation and the fallout from the Russia-Ukraine war hurt the tech behemoth’s businesses.  --------------------------------------------------------------- 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? 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