High-Growth Companies in Southeast Asia

29 April 2021

Fuelled by pandemic-led digitalisation, Asian businesses with a strong online presence are moving ahead of their competitors. The following two articles have a closer look at the extraordinary growth in the region.

Cash splash: How Sea became Southeast Asia's biggest public company

Founded in 2009 in Singapore as a gaming company, Sea is now Southeast Asia’s largest public company. Since then, its core business has expanded to finance and e-commerce. In fact, in 2020 revenue from its e-commerce arm Shopee exceeded that of gaming business. Nevertheless, gaming continues to be the company’s cash cow that funds the growth of its other businesses currently operating at a loss. Being publicly listed, one of Sea’s clear advantage over its privately held tech competitors, like Grab and Gojek, is access to funding. Instead of going back to investors and arranging new funding rounds, Sea can directly tap into the markets to raise capital. And that capital is vital, when you are heavily involved in “cash burn”, an expensive customer acquisition strategy commonly used in the tech industry. Despite doubling the revenue to $4.37bn, the company suffered a net loss of $1.61bn last year. Investors, however, seem to believe in this strategy as the company’s valuation suggests. At $120bn Sea tops not only Southeast Asian counterparts, but also well-known U.S. tech stocks such as Uber.

One problem with Sea’s growth strategy is not only that it is expensive, but the company also may not gain long term loyalty. Customers often end up following the money, and it is possible that they would quickly switch to other brands with better offers. As such, Sea is not buying market share, but rather renting it. In addition, Sea’s biggest advantage, being publicly listed, could easily become its liability. Exposure to volatility and additional scrutiny means that access to capital markets might suddenly become difficult. Despite these challenges, the company has big plans for further expansion. Having acquired a Hong-Kong based investment firm, Sea is setting up Sea Capital, its own investment arm that will broaden its digital ecosystem. The company has also heavily invested in artificial intelligence to support its existing businesses an discover new opportunities. At the same time, Sea is looking to expand beyond Southeast Asia. With its gaming business already present in Latin America, the company is planning to bring its e-commerce solutions to the continent.

Read the full article on the Asia Nikkei website.

Carro tops FT ranking with help of AI

Founded in 2015, Carro is an ecommerce platform for used vehicles. With operations in Singapore, Thailand, Indonesia and Malaysia, Carro has established itself as one of the fastest growing businesses in the region. In fact, from 2016 to 2019 the company enjoyed an extraordinary compound annual growth rate of 422 per cent leading to a revenue of $86m in 2019. In the same period, the number of employees exploded from 10 to 400. Like other websites, Carro provides a detailed report on each second-hand vehicle listed on the platform, giving consumers assurance over their purchases. What sets the company apart from competitors in the used-car marketplace is the deployment of artificial intelligence to assist its core business. Carro’s AI system scans car images to detect potential problems, reducing human error by as much as 80 per cent and speeding up the process by 20 per cent. The company benefits from region’s rapid digitalisation. Despite a revenue drop of 70 per cent between April and June 2020, Carro is expecting to more than double the total revenue in the full year to March 2021.

Read the full article on the Financial Times website

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