SEA giants break bear’s grip with stellar Q3

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](. --------------------------------------------------------------- Written by Shravanth Vijayakumar Journalist Hello {NAME} I was looking forward to bringing our readers today’s Opening Bell. It feels good to be the bearer of good news for once - especially in these challenging macroeconomic times. Southeast Asian tech behemoths, Sea Group (SE, NYSE) and Grab (GRAB, NDAQ), managed to pull off a delicate balancing act between cutting costs and fueling growth to report outstanding third-quarter results last week. Honestly, it’s a breath of fresh air while layoffs continue to ravage tech industries and inflation still has markets in a bear hold. Shares of Shopee parent Sea rose a staggering 36% despite the firm [cutting]( its full-year bookings outlook for gaming unit Garena and posting a more than double Q3 adjusted EBITDA loss it booked last year. Quite a conundrum, isn’t it? Luckily, today’s first featured piece by Tech in Asia chief analyst Simon Huang dissects how Sea satiated anxious investors by efficiently monetizing Shopee’s gross merchandise value and slashing its sales and marketing expenses. When it comes to Grab, the ride-hailing and food delivery giant appears to be ahead of its own schedule. The firm’s deliveries segment broke even on a segment-adjusted EBITDA basis three quarters ahead of its forecasts. Q3 revenue more than [doubling]( is the icing on the cake. In our other featured piece, Simon highlights how Grab plans to build on this promising quarter through an intensified focus on organic growth and expansion through partnerships. He also touches upon the key role its financial services and ads business has to play in the company’s future. While these two Southeast Asian darlings seem to be regaining some lost ground, they’ve still got a ways to go to reach their lofty peaks, with shares of Sea and Grab down more than 70% and 50% year to date, respectively. There is an argument to be made that maybe their shares have just bottomed out. However, based on their latest quarterly reports, a turnaround for Sea and Grab may be a lot closer than many predict. -- Shravanth  ---------------------------------------------------------------  THE BIG STORY   1️⃣ [Why Sea’s shares jumped 36% after its Q3 results]( Sea’s third-quarter results hit the right notes with investors, but the troubles at Garena mean the company is not yet out of the woods. 2️⃣ [Grab delivers the goods in its Q3 results, talks up ads business]( Grab’s third-quarter results were a test of the Southeast Asian super app’s ability to trim incentives while keeping growth on track. Also, if crunching numbers throughs charts and graphs are more your style, don’t worry as Tech in Asia has got you covered. Here’s [Sea Group’s financial health in 8 charts]( and [Grab’s financial health in 9 charts](.  3 TRENDS TO KEEP AN EYE ON Hot stocks, earnings reports, restructuring, pressure from activist investors, and more. 1️⃣ Tepid growth sees China’s tech giants scamper to reward shareholders: While Southeast Asia’s tech titans posted robust sales growth numbers, the same cannot be said for firms such as Alibaba (BABA, NDAQ), and Tencent (0700, HKG), which are grappling with Covid-19 curbs and a worsening economic outlook in a mature Chinese market. Ecommerce giant Alibaba [posted]( a low single-digit rise in quarterly revenue, while Tencent, the world's largest video-game company, [saw]( its sales fall for a second straight quarter. To offset the consequences of sluggish growth, Tencent will reward its shareholders through a dividend distribution of its US$20.3 billion stake in food delivery firm Meituan (3690, HKG). Meanwhile, Alibaba, which indicated that roughly 15% of places in China experienced abnormal logistics and delivery services due to Covid-19 protocols, opted for a well-trodden path of sharing wealth with investors by upsizing its share repurchase program by another US$15 billion. Here is the chart-wise breakdown of what the latest quarterly results mean for [Alibaba’s]( and [Tencent’s]( financial health.  See also: [How Alibaba’s Ant Group revived SEA ambitions]( 2️⃣ Layoff bug now a pandemic: Job cuts have been streaming in off late - an indication that the trickle-down effects of rate hikes by central banks are beginning to leave their mark on economies. To curb consumer spending by seeing people lose their jobs is almost Game of Thrones-esque (minus the bloodshed) in my opinion, but it’s all done with a view to preventing hyperinflation and an economic disaster. Sea [managed]( to keep a lid on costs by letting go of 7,000 staff - roughly 10% of the company’s total workforce - in the last six months, while Indonesian tech titan GoTo Group (GOTO, IDX) [is slashing]( 1,300 jobs (about 12% of its headcount). Over in China, Tencent [relieved]( 1,879 staff off their duties in the third quarter of the year, on top of axing 5,500 workers in the previous quarter. Matters aren’t rosy in the West either. Social media firms have been hit hard, with Twitter handing out pink slips to as many as half its employees (nearly 3,700 staff) after Elon Musk took over the microblogging giant. Meanwhile, Facebook parent Meta (META, NDAQ) is [downsizing]( its workforce by 11,000 employees. Amazon (AMZN, NDAQ) has become the latest US-based behemoth to [catch]( the layoff fever, with the ecommerce firm aiming to cut around 10,000 jobs, while saying that there would be more role reductions extending into next year.  Read more: [Tracking tech startups hiring across Asia (Updated)]( 3️⃣ Plenty of IPO posturing going on: Global public listing volumes have [fallen]( 44%, with proceeds down by 57% in the first nine months of the year. However, strong IPO-related activity behind the scenes in Asia-Pacific hints at more encouraging times ahead of public market enthusiasts in 2023. Singapore-born AnyMind is in fact preparing [to debut]( next month in Tokyo. The move comes after the ecommerce enabler postponed the IPO earlier this year due to unfavorable macroeconomic conditions. Meanwhile, with reports whirling around over a potential US$2.5 billion speacial purpose acquisition company deal with Bridgetown, Peter Thiel and Richard Li’s blank-check firm, Singapore-based telco firm Circles Global has strengthened its C-suite [by appointing]( Brian Finn, former group CCO of telco and media firm Digicel Group, as its new chief business officer. In India, B2B ecommerce unicorn Udaan, which is targeting a public listing in the next 12 to 18 months, posted revenue growth of 67% for the financial year ending March 2022, but losses widened 23%. A 3x year-on-year drop in the company’s cash and cash equivalents doesn't make for pleasant reading when talking about a possible IPO, but the firm has conducted layoffs this year in an effort to be more “prudent economically.” You can find the in-depth details of the unicorn’s financials [in this premium story](. Lastly, Vietnam-based fintech startup F88 [has secured]( a US$60 million loan and has set its sights on expanding to 1,400 locations by 2024 - the year it has earmarked for an IPO.  ---------------------------------------------------------------  2 EYE-POPPING FACTS Tech in Asia scours the internet to bring you head-turning numbers from the world of business. - You’ve probably already guessed this has something to do with FTX. Soon after Sequoia marked its investment in the bankrupt crypto exchange down to zero, SoftBank (9984, TYO), and Singapore investment major Temasek swiftly [followed]( suit. For the Japanese firm, the write down comes after its Vision Fund arm posted a US$7.2 billion quarterly loss as plunging startup valuations continue to weigh on its balance sheet. [US$20 million]( - KB Securities, a subsidiary of South Korea’s KB Financial Group (105560, KRX), led a pre-series B extension round of ADDX, a Singapore-based private-market exchange. The fresh US$20 million capital injection comes on top of the US$58 million that ADDX initially raised in May.  --------------------------------------------------------------- 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.  Google’s Southeast Asian job, and a 14-year marriage ends With Southeast Asia’s digital economy expected to reach US$200 billion in gross merchandise value this year, Google (GOOGL, NDAQ) wants to be the go-to e-wallet in the region. With Google Wallet already operating in Singapore, Hong Kong, and Taiwan, the search engine firm plans [to expand]( this feature into Thailand and Vietnam. It has also [teamed up]( with Visa (V, NYSE) to penetrate the Malaysian market by allowing Visa Malaysia credit card holders, registered with several banks, to store their cards on Google Wallet. However, one long-term partnership (14 years to be exact) has come [to an end]( Blizzard Entertainment, a unit of Activision Blizzard (ATVI, NDAQ), cut ties with Chinese gaming firm NetEase (9999, HKG). The US-based gaming publisher behind popular games such as World of Warcraft and Overwatch did not extend their collaboration, sending NetEase shares plunging about 15% in Hong Kong.  --------------------------------------------------------------- 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