Blog > Marketplace News > Share Price of Shopee's Parent Company Was Lowered After News of TikTok Shop's Return Was Confirmed
Share Price of Shopee's Parent Company Was Lowered After News of TikTok Shop's Return Was Confirmed
Jayson 07 Dec 2023 03:24
CGS-CIMB has lowered its target price on Shopee parent Sea to $42 from $61, citing rising competition in Indonesia's e-commerce sector, which affects its earnings risks.
The brokerage said yesterday (December 6) that it had lowered its target price and downgraded its rating to "hold" from "buy" following news that rival TikTok Shop may return to the market.
CGS-CIMB analysts Ong Khang Chuen and Kenneth Tan said ByteDance's TikTok has reached an informal agreement to invest in Tokopedia, a subsidiary of Indonesian technology company GoTo, and the two parties will cooperate in e-commerce services.
GoTo was formed in 2021 from the merger of Indonesian ride-hailing giant Gojek and e-commerce company Tokopedia.
Analysts subsequently lowered their fiscal 2024 e-commerce corporate output-to-sales forecast to 0.75 times.
They also note that Sea's valuation is modest, with the current share price implying 0.5 times Shopee's forecast fiscal 2024 sales, below its e-commerce peers' median multiple of 2.2.
In addition, Morgan Stanley downgraded Sea's stock rating from buy to neutral and lowered its target price in a report released on the 4th.
Recent news that TikTok is relaunching its e-commerce presence in Indonesia could mean that spending will remain elevated for longer, analysts said. "As a result, we believe Sea's earnings forecasts for the next 6-12 months are quite low."
The brokerage said yesterday (December 6) that it had lowered its target price and downgraded its rating to "hold" from "buy" following news that rival TikTok Shop may return to the market.
CGS-CIMB analysts Ong Khang Chuen and Kenneth Tan said ByteDance's TikTok has reached an informal agreement to invest in Tokopedia, a subsidiary of Indonesian technology company GoTo, and the two parties will cooperate in e-commerce services.
GoTo was formed in 2021 from the merger of Indonesian ride-hailing giant Gojek and e-commerce company Tokopedia.
Analysts subsequently lowered their fiscal 2024 e-commerce corporate output-to-sales forecast to 0.75 times.
They also note that Sea's valuation is modest, with the current share price implying 0.5 times Shopee's forecast fiscal 2024 sales, below its e-commerce peers' median multiple of 2.2.
In addition, Morgan Stanley downgraded Sea's stock rating from buy to neutral and lowered its target price in a report released on the 4th.
Recent news that TikTok is relaunching its e-commerce presence in Indonesia could mean that spending will remain elevated for longer, analysts said. "As a result, we believe Sea's earnings forecasts for the next 6-12 months are quite low."
