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JPMorgan analysts told investors that the growth pivot has come at the expense of profits.
“SE’s decision to accelerate e-commerce investments in growth is likely to materially weigh on its earnings and share price in the near term,” they wrote.
They added: “SE could potentially incur heavy investments in 2H23 (a busy campaign period), resulting in earnings decline in 2H. The amount that SE is willing to invest and effectiveness of those investments are likely to only become clearer in 2024.”
As a result, despite the “relative valuation multiples appearing undemanding after its underperformance,” JPMorgan believes rerating catalysts are unlikely to materialize before 1H24.
