In today’s briefing:
- Sea Ltd: No Nearer to Stable Profitability Than Before
- Sea Ltd (SE US) – Scalability Winning Battles
- Sheng Siong (SSG SP) FY23: Resilient Earnings Despite Margin Pressure, FY24 Flattish
Sea Ltd: No Nearer to Stable Profitability Than Before
- Sea (SE US) has completed a full cycle of growth followed by a phase of profitability improvements/cost-cutting.
- Although substantial cost reductions have been implemented, these efforts have mainly focused on fixed costs.
- With marketing efficiency unchanged and significant improvements in gross margin difficult, the company appears no closer to achieving stable profitability than it initially was.
Sea Ltd (SE US) – Scalability Winning Battles
- Sea Ltd (SE US) released 4Q2023 and FY2023 results with a full-year net profit but another loss in 4Q but QoQ improvements for e-commerce and digital financial services.
- E-Commerce core market growth rates where impressive, with strong growth momentum with Brazil seeing large profitability gains, whilst overall Shopee is gaining share with the additional benefits from greater scale.
- Digital Financial Services saw a significant uptick in its loan book and profitability, whilst management pointed toward 2H2024 profitability for Shopee. Management is pointing towards 2024 being another profitable year.
Sheng Siong (SSG SP) FY23: Resilient Earnings Despite Margin Pressure, FY24 Flattish
- Despite margin pressure, Sheng Siong (SSG SP) delivered resilient earnings for FY23. Revenue was up 2.3% YoY, and profits were up 0.3% YoY.
- The company guided it had opened two additional stores at the start of 2024 (2023 end: 69), and six more locations were up for tender in 2024.
- The stock trades at 17x FY23, with a 4% dividend yield and 15% of the market cap in cash. Margin pressure due to inflation will be a headwind in FY24.
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