Earnings point to growing riches in SEA while China takes back seat

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If recent optimism in Southeast Asia wasn’t enough to convince wary investors of the region’s potential, the latest quarterly results of Grab (GRAB, NDAQ) and Sea Group (SE, NYSE) will go a long way towards turning doubters into believers.

While there is no sugarcoating how the share prices of Singapore’s tech darlings collapsed amid broader market struggles in recent months, last week’s knockout earnings reports could be the catalyst for a much-needed change in fortunes for Sea and Grab.

Grab shares rose by as much as 32% after the super app forecasted a rebound in its ride-hailing and food delivery businesses. The company, which operates in eight Southeast Asian countries, got a boost from the reopening of economies in the region – its first quarter revenue rose by 6%.

Grab’s ride-hailing business, which was affected by a pandemic-induced lull in several markets, is now seeing a recovery as offices reopen. The firm also expects its delivery segment’s adjusted core earnings to break even by the end of 2023.

See also: Grab’s financial health in 9 charts

Meanwhile, Sea’s shares climbed by about 13% after posting a smaller-than-expected quarterly loss and beating quarterly sales estimates, aided by the strength of its ecommerce business, Shopee. The company, which also operates fintech arm SeaMoney and gaming unit Garena, said that its ecommerce revenue grew 64.4% in Q1.

Image credit: Timmy Loen

Moving from one side of the spectrum to the other, we turn our focus to China, whose tech firms have been feeling the strain of an economic slump, Covid-related lockdowns, and heightened regulatory scrutiny.

Despite those hurdles, ecommerce juggernaut JD.com (JD, NDAQ) posted an 18% jump in quarterly revenue as more people shopped on its platform amid recent lockdowns in the world’s second-largest economy.

Initial investor optimism, which boosted JD.com shares by as much as 9%, was wiped out after the firm’s CEO called for caution during a post-earnings call, citing expected logistical disruptions and sluggish consumption.

Furthermore, JD.com swung to a loss of nearly half a billion US dollars from a profit of US$535.5 million in the same quarter in 2021. Chinese smartphone maker Xiaomi (1810, HKG) repeated the trick by reporting a loss of 530.7 million yuan as Covid-19 outbreaks in Hong Kong and Shanghai disrupted shipments.

Matters are even worse for China’s most valuable tech company: Tencent (0700, HKG). The WeChat operator’s Q1 profit halved as it posted its slowest quarterly revenue growth since 2004. The Hong Kong stock index posted its worst performance in over two weeks as shares of the Shenzhen-based firm – its largest constituent – fell 7%.

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