[Correction] GrabKitchen falls victim to super app's profitability push

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]( CORRECTION NOTE The newsletter has been updated to reflect that Oversea-Chinese Banking Corporation was fined US$1.1 million by the Dubai Financial Services Authority, not US$1.1 billion. --------------------------------------------------------------- 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](. --------------------------------------------------------------- Written by Simon Huang Journalist Hello {NAME} I haven’t ordered food from a cloud kitchen before. My beef with food delivery services is the overwhelming number of options. Wouldn’t life be simpler if you were only given two choices? Ok, so maybe I’m not in the customer segment these companies target - One reason food delivery services run cloud kitchens is to close cuisine gaps on their platforms - this was why Grab (GRAB, NDAQ) started its cloud kitchen business four years ago. Now, GrabKitchen is shutting its operations in Indonesia, where the super app has over 40 cloud kitchens. In this week’s big story, my colleague, Samreen, covers the reasons for this and the implications for the sector as a whole. Current market conditions have forced tech companies to cut costs - just this week, Meta (META, NDAQ) announced layoffs for the first time in its history. At least Meta is profitable. Companies like Grab that have yet to turn a profit - let alone generate free cash flow - are under even greater pressure from investors to get into the black. One way to do so is to focus on a company’s core businesses and jettison non-core segments. The decision to close GrabKitchen should be seen in that light rather than as an indictment of the sector as a whole. Grab’s exit from the market may actually benefit the remaining players, who will have to deal with one less competitor. Grab may also choose to partner with one of the existing players, which may allow it to retain some of the benefits of GrabKitchen without having to own the assets. For many tech platforms, focusing on core businesses involves recognizing that their key advantage goes back to the basics of a platform - asset light and gains from network effects. -- Simon  ---------------------------------------------------------------  THE BIG STORY  [Making sense of Grab’s closure of cloud kitchens in Indonesia]( The shutdown is unlikely to be an obituary for the whole industry.  See also: [Indonesia’s Wahyoo eyes series B raise to bake in cloud kitchen ambition]( 3 TRENDS TO KEEP AN EYE ON Hot stocks, earnings reports, restructuring, pressure from activist investors, and more. 1️⃣ Blibli goes public: Global Digital Niaga (BELI, IDX), the parent company of Indonesia-based ecommerce firm Blibli and online travel company Tiket, started trading on the Indonesian Stock Exchange last week. Its shares were trading at 456 rupiah as at the close of the first day of trading, up 1% from the IPO price of 450 rupiah. This gives the company a market cap of around US3.4 billion, compared to Bukalapak’s (BUKA, IDX) US$1.9 billion and GoTo’s (GOTO, IDX) US$15 billion. Blibli raised US$510 million from the IPO. However, more than half of that (US$355 million) will be used to pay off its debts to banks. As my colleague, Jofie, pointed out [previously]( around US$130 million of this is owed to Bank Central Asia (BBCA, IDX), which has the same controlling shareholders as Blibli. While it makes sense for the ecommerce firm to pay off debts, this means that there is less to invest in growing the business and innovation. On a broader level, the rollout of yet another tech IPO in Indonesia solidifies the archipelago’s status as the region’s leading stock exchange for consumer tech IPOs, albeit for Indonesia-focused companies. In the future, it wouldn’t be surprising if some regional tech companies choose to list their Indonesian subsidiaries on the Indonesian stock exchange. 2️⃣ Meta lays off 13% of workforce: Social media giant Meta announced plans to lay off over [11,000 employees]( or 13% of its workforce - the [first time]( the company has had to so in its history. In his [message to employees]( CEO and founder Mark Zuckerberg admitted that he was wrong to have anticipated a permanent acceleration of online commerce growth as a result of the pandemic. Instead, growth has “returned to prior trends.” While Zuckerberg may be criticized for this oversight, many other companies made the same mistake. In 2020-2021, talking heads were falling over themselves to explain how the pandemic would bring about a “new normal,” ignoring the fact that many were actually happy with their pre-pandemic lives and would go back to traveling, shopping, and dining out once they were able to. Hybrid work and inflation are perhaps some of the longer-lasting effects of the pandemic and lockdowns.  Read more: [Tracking layoffs across Asia’s startup ecosystem (Updated)]( Zuckerberg also highlighted other things that Meta was doing to cut costs, including shrinking its real estate footprint, which can’t be good news for the owners of commercial office properties. However, Meta does not seem to have any intention of scaling back its big metaverse investments and plans - or at least will not admit to doing so publicly. Much of the angst investors have towards Meta (whose stock is down by 70% year-to-date) stems from its seemingly limitless spending on that front. Until Zuckerbeg can effectively address those concerns, don’t expect a substantial recovery in Meta’s beaten-down shares. 3️⃣ Lyft (LYFT, NDAQ) dumped on growth fears: Investors dumped shares in US ride-hailing company Lyft, after its latest results showed active riders growing at a slowing pace and below market expectations. This comes only a week after shares of rival Uber (UBER, NDAQ) [soared]( after the company beat revenue expectations. According to [analysts]( Uber was doing a “much better job at rebuilding driver supply.” One factor in Uber’s advantage is its food delivery business, which gives its drivers more opportunities to make money than Lyft, which focuses entirely on ride-hailing. This is the dominant model in markets like Southeast Asia, where Grab and GoTo offer a range of services beyond ride hailing - a moat against would-be competitors like Tada or Ryde in Singapore  ---------------------------------------------------------------  2 EYE-POPPING FACTS Tech in Asia scours the internet to bring you head-turning numbers from the world of business. - The value that VC fund Sequoia has marked its investment in cryptocurrency exchange FTX down to, following news over the weekend that FTX had suffered a “bank run” and was looking for a bailout from competitor Binance, which has since declined to proceed with a takeover. [US$2 billion]( - The amount that TikTok cut from its 2022 revenue outlook, which is now forecast at US$10 billion instead of US$12 billion. This comes even though TikTok outpaces its social media competitors in terms of growth and user engagement. The cool-off in advertising spend is well and truly here.  --------------------------------------------------------------- THE ONES YOU DIDN'T SEE COMING We spotlight the unusual, not-your-everyday kind of story that had everyone talking and social media buzzing over the past week.  Bank of Singapore fined by Dubai regulator Bank of Singapore, the private banking arm of Singapore’s Oversea-Chinese Banking Corporation (OCBC) (O39, SGX), was [fined US$1.1 million]( by the Dubai Financial Servies Authority for various breaches, including having inadequate systems and controls to check money laundering. Singapore’s banks are generally risk-averse and well-regulated and do not typically run into such problems. OCBC often [touts]( its ranking as one of the world’s safest banks and has also been named the Best Managed Bank in Singapore. While one can argue that this violation by the Dubai branch of Bank of Singapore is twice-removed from OCBC, the latter is ultimately responsible for the actions of its global subsidiaries.  --------------------------------------------------------------- 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](. 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