Maybank Securities analysts Hussaini Saifee and Etta Rusdiana Putra are keeping their “buy” calls on Singapore Telecommunications Z74 (Singtel) and Sea after meeting over 30 investors across Singapore, Kuala Lumpur, Bangkok and Jakarta following its recent internet and telecommunication initiations.
From these, Maybank understands that more investors are positioned in Grab while Sea’s year-to-date outperformance led to questions of what could be the next share price catalysts.
Meanwhile, questions on GoTo centered on a potential Grab-Gojek merger, while Singtel remains high on investor radar post its new dividend policy and as a data center demand beneficiary.
Among regional telcos, Singtel dominated most investor discussions, the analysts note. “Although Singtel’s data center inroad is a step in the right direction, we see a bigger catalyst from the potential Singapore mobile consolidation, Optus turnaround and dividend clarity,” they add.
When it comes to GoTo, Indonesia-based investors remain particularly sanguine on the potential Grab-Gojek partnership. Maybank believes the potential partnership would give better pricing power to Grab especially in Indonesia which is relatively more competitive.
Additionally, investors feel the pricing of food delivery and ride hailing has increased, which in turn could weigh on the gross merchandise value (GMV) growth.
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On the e-commerce front, investors are cognisant of recent promotions such as Tokopedia’s free shipping and Lazada’s Choice offers. They see these moves as a step-up in competitive intensity, the analysts highlight.
They add that investors were not concerned about Temu’s and Shein’s entries in Asean and Brazil. However, they did inquire on the risk of their aggression in Asean if those platforms face increased restrictions in the US.
“Investors are of the view that although it has raised take-rates, TikTok Shop is unlikely to settle at its current market share and, as such, see risk that it may step-up competitive intensity. We flag that overall e-commerce competition remains rational, in our view, while the recent moves by Tokopedia and Lazada are more tactical in nature,” Hussaini and Etta add.
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They further note that starting July, TikTok Shop has lowered take-rates by about 1 percentage point across a few of its sub-categories within the fashion cluster in Thailand while Shopee has increased take-rates by 1-2 percentage points in Thailand, the Philippines and Vietnam.
Maybank’s target price for Singtel, Sea and Grab stood at $3.40, US$90 and US$4 respectively.
