$Sea (SE.US)$$Grab Holdings (GRAB.US)$ Maybank KE re-initiat...

Maybank KE re-initiate coverage of Sea with buy and SOTP-based TP of USD90. They see SE entering the 'post post-Covid phase' from a position of strength (multiple competitive moats, scale advantage and financial muscle) to tap the 15% CAGR in the ASEAN e-commerce and fintech space. Its gaming business has stabilized and we find management efforts to make Free Fire an evergreen franchise as credible.

They estimate Sea's revenues to expand at 16% CAGR over FY23-26E, while a healthy mix of scale benefits and steady monetization improvement drive their 24% EBITDA CAGR expectations. Trading at 0.4x EV/GMV and 3x EV/sales for FY24E, valuations are at 25-30% discount to MELI.

They Grab to a non-consensus hold and trim our TP by 11% to USD4.0. While the structural growth drivers are in place and Grab has a scale advantage, they believe mild headwinds are likely to cap monetization - Xanh SM's entry, tight driver supply and consumer spending pressure. They see limited room for long-term improvement in the take-rate.