Another digital bank licence in the bag
? Consortium led by SE and YTL was awarded a digital bank licence in
Malaysia today. This is the fourth digital bank licence secured by SE to date.
? Digital bank licence will enhance SE’s ability to roll out more financial
offerings and better monetise its DFS segment.
? SE’s first digital bank rollout in Indonesia has seen strong initial traction; it is
currently leading in terms of loans and deposits. Reiterate Add.
Consortium led by SE awarded digital bank licence in Malaysia
? A consortium led by Sea Limited and YTL Digital Capital was among the five winners
of Malaysia’s digital bank licences announced by Bank Negara Malaysia (BNM) today.
? YTL Digital Capital is backed by YTL Corp (YTL MK, Add, TP: RM0.65), a Malaysian
infrastructure conglomerate, with activities spanning across hotels, property,
technology, infrastructure and more.
? The awardees were selected from a total of 29 consortia which applied for the licences
in Jun 20. Successful applicants will undergo a period of operational readiness that will
be validated by BNM through an audit which may take between 12 to 24 months,
before they can commence operations.
4th digital bank licence secured; expect better monetisation of DFS
? This represents the fourth digital bank licence secured by SE to date (after Singapore,
Indonesia and Philippines).
? Leveraging its digital bank licences, we believe SE can roll out a more comprehensive
suite of services for its digital financial services (DFS) segment going forward,
including credit services and insuretech.
? This will allow SE to better monetise the DFS segment, such as offerings with a higher
take rate vs. e-wallet payments. With its rapid scaling of user base, expanding product
offerings and enhanced commercialisation, SE expects its DFS segment to achieve
positive cashflow by FY23F.
SeaBank has already established strong initial traction in Indonesia
? SE began its first digital bank operations in Indonesia (SeaBank) in mid-2021. Tapping
into its strong Shopee consumer and merchant base, the digital bank has been scaling
up rapidly, especially in 4Q21, with an attractive savings rate of up to 7%. As of endFeb 22, SeaBank led other digital bank players in Indonesia, ranking No.1 in terms of
both its loan size as well as deposits.
? SeaBank Indonesia has also turned profitable since Dec 21, and its PPOP of Rp87bn
in Feb 22 is much higher than other digital banks in Indonesia (ARTO: Rp23bn, BBYB:
-Rp107bn, Blu: -Rp9bn), supported by its high NIM of 15%.
Reiterate Add and TP of US$202
? Reiterate Add. We continue to like SE’s longer-term potential given strong ecommerce leadership in ASEAN, immense DFS growth, backed by a robust cash-generating gaming business. Re-rating catalysts: further commission rate hikes for
Shopee and faster pace of Shopee narrowing losses in 2H22F. Downside risks:
Southeast Asia economy reopening leading to near-term topline weakness.