GoTo’s Public expose makes Sea Ltd & Grab look better
- GoTo’s gross e-commerce revenue could be one-third of Shopee Indonesia due to its lower take rate; GoTo’s On-demand revenue seems higher than Grab Indonesia.
- Overall GoTo Group EBITDA losses are significantly higher than its peers.
- Sea Ltd is our preferred pick. Maintain BUY on Sea Ltd with unchanged TP of US$256.
GoTo’s gross e-commerce revenue could be one-third of Shopee Indonesia due to its lower take rate. GoTo’s e-commerce gross revenue in 2021 should be close to US$350m based on 2.2% take rate on ~US$16bn gross merchandise value (annualizing 3Q21 GMV) Shopee’s e-commerce revenue in Indonesia are estimated to be US$0.9bn-1.2bn in 2021 at 6%-7% take rate. We have assumed that 15-20% of Shopee’s regional revenue stem from Indonesia.
GoTo’s On-demand revenue across Food Delivery, Mobility & Logistics seem higher than Grab Indonesia. GoTo’s on-demand gross revenue should be close to US$717m, almost double of Grab Indonesia. Assuming 15-20% of Grab’s adj revenue come from Indonesia, we estimate Grab Indonesia’s Delivery & Mobility adj revenue of US$310m-410m in 2021. This can be explained by a much larger on-demand logistics business of Gojek.
Overall GoTo Group EBITDA losses are significantly higher than its peers. GoTo’s overall EBITDA loss might be ~US$1.5bn translating to (i) 126% of its FY21 gross revenue of ~US$1.2bn and (ii) 4.7% of its gross transaction volume of US$33bn. Sea Ltd’ FY21 total group EBITDA loss is (US$594m), translating to 6% of its group revenue of US$10bn. On the other hand, Grab’s FY21 adj EBITDA loss of (US$842m) translates to (i) 37% of its adj revenue of US$2.3bn and (ii) 5.1% of its group GMV of US$17bn. This can be due to much bigger losses across e-commerce and logistics businesses of GoTo.
| FY2021 | Sea Ltd | Grab | GoTo |
| Group GMV (US$m) | 62,553 (Excludes Gaming) | 16,597 | 32,790 |
| Group Revenue (US$m) | 9,955 (GAAP) | 2,301 (Adjusted) | 1,230 (Gross) |
| Group Take rate | NA | 13.9% | 3.8% |
| Group Adjusted EBITDA | (594) | (842) | (1,546) |
| Group Adjusted EBITDA margin | -6% | -37% | -126% |
| Group Adjusted EBITDA as a % of Group GMV | -0.9% | -5.1% | -4.7% |
Source: Companies, DBS Bank
GoTo might trade at 3-4x FY22F gross revenue based on peer multiples. We project GoTo to secure FY22F gross revenue of US$1.8-2.0bn in FY22F up 50-60%. GoTo is positioned better than Grab in Indonesia due to its bigger ecosystem comprising e-commerce and logistics business. However, GoTo’s EBITDA losses are more severe than Grab and Sea Ltd. Sea Ltd is trading at 4x FY22F revenue while Grab is trading at 2x adj FY22F revenue. Maintain BUY on Sea Ltd with TP of US$256 and HOLD on Grab with TP of US$5.60.