In today’s briefing:
- 2023 High Conviction – GoTo – Burnt Through All Cash From the IPO, Weakest Cash Position Among Peers
- Sea Ltd (SE US) – Wind Back in the Sails
- 2023 High Conviction Ideas: Meituan
2023 High Conviction – GoTo – Burnt Through All Cash From the IPO, Weakest Cash Position Among Peers
- In Mar 2022, GoTo (GOTO IJ) raised around US$1bn from what was essentially a domestic Indonesian IPO.
- GoTo has already burnt through the cash it raised from the listing and cash burn still remains high, while its cash balance is amongst the lowest in its peer set.
- At its current cash burn pace, the company will have to come to the markets again soon.
Sea Ltd (SE US) – Wind Back in the Sails
- Sea Ltd 3Q2022 results should be seen as the poster child for the rest of the space given a crystal clear focus on profitability and pragmatic approach to future growth.
- The fact that the company is now contribution margin positive in ASEAN and even Adjusted EBITDA positive in Malaysia and Taiwan is a testament to its success in controlling costs.
- Sea Ltd (SE US) has seen a significant compression in valuations and now looks attractive on 2.1x FY2023V EV/Sales and 1.7x FY2024E EV/Sales.
2023 High Conviction Ideas: Meituan
- Meituan is a leading “service e-commerce” platform in China, leveraging technology to connect consumers with merchants.
- With the gradual re-opening in 2023, core local commerce will deliver better than expected result.
- Tencent’s distribution of Meituan shares provides a good entry point.
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