Investment Bank Research Brief
Bernstein believes that competition in the Southeast Asian e-commerce industry is becoming more rational, and platform pricing strategies focus more on profit protection rather than competition for share.
Bernstein believes that competition in the Southeast Asian e-commerce industry is becoming more rational, and platform pricing strategies focus more on profit protection rather than competition for share. Shopee and TikTok Shop adopt differentiated pricing strategies. The former pushes up the actual selling price by reducing subsidies, while the latter offsets the contraction of promotions by reducing delivery fees. The competition intensity between the two has not changed significantly. It expects its e-commerce profit margins to remain resilient. The market's concerns about the sustainability of Shopee's profitability may be excessive. In fact, the stability of the competitive landscape has provided support for the company's profits. One-sentence conclusion: The smoke of the money-burning war among Southeast Asian e-commerce companies is dissipating. Shopee has proven its ability to maintain profitability without sacrificing market share through rational pricing and operational optimization. The revaluation of Sea Ltd is taking place. Positive/negative: Positive for Sea Ltd (SE.US). The current stock price may not yet fully reflect the structural improvement in the profitability of its e-commerce business, and improved profit margins are the core catalyst for future stock price increases. Catalysts: 1) Sea Ltd's next quarter financial report, focusing on the adjusted EBITDA profit margin of the e-commerce business (Shopee); 2) TikTok Shop's commission policy changes in Southeast Asia to determine whether competition will further ease.