Maybank Investment Bank expects Singapore-based Sea‘s revenues and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to grow 31 percent and 79 percent, respectively year on year in the second quarter.

The research house said in a note on Tuesday that given seasonally strong momentum in the first quarter, it expects the firm’s sequential softness in the second quarter with adjusted EBITDA declining 15 percent quarter on quarter, mainly due to Shopee and Garena.

“We expect Sea’s net earnings to surge three times year on year to $341 million but decline 17 percent quarter on quarter also due to higher taxes, -23 percent below street,” it noted.

That said, it highlighted the firm’s underlying momentum remains strong as it sees Shopee platform strength and Garena intensity helping to extend growth momentum.

In the second quarter, Maybank expects Shopee gross merchandise value (GMV) to grow 23 percent year on year/flat quarter on quarter, 1 percent ahead of street estimates.

It noted that its first quarter was a seasonally strong quarter helped by Lebaran and Chinese New Year and as such initial indications point to a quarter on quarter decline.

“However, we think rational competition, favorable consumer online spending and foreign exchange (FX) tailwinds remain supportive factors,

“We expect its adjusted EBITDA to GMV margins to dip 10 basis points quarter on quarter, leading to a drop of 10 percent quarter on quarter in adjusted EBITDA, mainly due to
ongoing investments in logistics, artificial intelligence (AI) etc while competition was stable,” said the research house.

Going forward, it sees a slight competitive concern in Brazil as MELI has stepped up its competitive ante.

“While we still see Shopee having the pricing advantage and not a major concern as of now, we remain watchful of the next competitive steps in Brazil,

“In ASEAN, competition remains stable and we see some commission up move recently,” it noted.

For Monee, Maybank expects its revenues and EBITDA to grow 65 percent year on year/9 percent quarter on quarter and 57 percent year on year/7 percent quarter on quarter, respectively, 6 percent/7 percent ahead of street estimates.

According to the research house, this is driven by Monee’s on/off-Shopee buy now, pay later (BNPL) and cash loans with stable non-performing loan (NPL) ratios.

It expects its loan book to expand 79 percent year on year to $6.5 billion, ranking Monee as the largest fintech company in ASEAN.

“While Shopee’s ecosystem remains a funnel to grow its BNPL offering, the penetration of such products at mid-teen levels leaves a long runway for growth,

“We see Monee as equally strong in growing off-Shopee loans with it venturing into new verticals like two-wheeler 2W financing,” said Maybank.

Maybank sees limited risk for Sea from MELI’s competitive ante