Market Movers - 6 July 2024
Stocks covered: SE, EVO, NIO, ADYEN, AMZN, APR.WA, NU
Welcome back to the Wolf of Harcourt Street Newsletter.
Market Movers is your time-saving guide to crucial stock news, cutting through the noise.
With all that being said, let’s dive into today’s edition!
Todays Agenda
Sea Limited Indonesia Tariffs and New Order Cancellation Policy
Evolution Awards and Launches
NIO Record Quarterly Deliveries
Adyen Latest Partnerships
Amazon Secures $1.3 Billion Cloud Deal With Australia's Spy Agency
Auto Partner June Sales Update
Nubank The Secret Behind its Mobile Service Offering
1. Sea Limited (SE) Indonesia Tariffs and New Order Cancellation Policy
Indonesia to Impose 200% Tariffs on Chinese Imports
Indonesia plans to impose import tariffs ranging from 100-200% on Chinese goods. The tariffs aim to mitigate the effects of the US-China trade war, which has led to an oversupply of Chinese products being redirected to Indonesia. The tariffs will affect a variety of products, including footwear, clothing, textiles, cosmetics, and ceramics. The move is significant for Southeast Asia's largest economy, reflecting a balancing act between protecting local industries and ensuring the availability of imported materials for domestic production.
Source: Asia Financial
My Perspective: This is very good news for Shopee because it will reduce the threat from China-owned platforms, Temu entering Indonesia, and Lazada expanding its market share. The market share data below is from 2022 but shows the market dominance in Indonesia that Shopee already has.
Shopee Pilots New Order Cancelation Window
Shopee is testing a new policy allowing customers to cancel orders later in the shipping process to enhance user experience and compete with rivals like Lazada and TikTok Shop. This policy, currently tested on selected sellers in Ho Chi Minh City and Hanoi using Shopee’s SPX Express service, permits cancelations even when goods are en route to warehouses, unlike previous rules limiting cancelations to the pre-dispatch phase.
Buyer Benefits
Buyers have more flexibility and control over their purchases.
It reduces the hassle of receiving and then returning unwanted goods.
Seller Concerns
Increased pressure on inventory management and the risk of goods being lost or incorrectly returned.
Potential delays in the return of canceled goods, complicating stock management.
Source: VnExpress
My Perspective: By implementing this customer-centric approach, Shopee is following a strategy similar to Amazon's focus on customer satisfaction, even if it sometimes comes at the expense of short-term seller convenience. The goal is to create a more attractive shopping environment that will ultimately benefit both customers and sellers through increased platform usage and sales.
2. Evolution (EVO) Awards and Launches
Best New Game Award
Evolution won Best New Game for Crazy Time at the EGR North America Awards 2024.
Source: EGR
My Perspective: Awards like this reinforces Evolution’s strength when it comes to designing and developing news games that delight players.
Live Casino Launch in Delaware
Evolution has launched its online live casino games in Delaware in partnership with Rush Street Interactive (RSI), a leading US iGaming company operating the BetRivers brand. Evolution's live games, including Roulette, Blackjack, Infinite Blackjack, Baccarat, Craps, and Poker variants, will be available through Delaware Lottery's online casino.
Source: Evolution IR
My Perspective: This launch follows the recent successful introduction of Evolution's online slots through RSI's BetRivers platform. It sounds like a land-and-expand model to me: start with the online slots, which most physical casino customers are familiar with, then introduce the live casino games. 6 U.S. states down, only another 44 to go.
3. NIO (NIO) Record Quarterly Deliveries
NIO delivered 21,209 vehicles in June 2024, a 98% increase compared to June 2023. This resulted in Q2 2024 deliveries of 57,373 vehicles, a 144% increase year-over-year and a new quarterly record. As of June 30, 2024, NIO has delivered a cumulative total of 537,020 vehicles
Source: NIO IR
My Perspective: This was a very strong performance from NIO, with deliveries topping the management guidance of between 54,000 and 56,000 units last month as part of the Q1 earnings results. However, we have seen NIO present false dawns previously, most notably in Q3 2023, before struggling to follow up. NIO needs to back this up in the quarters and years ahead. I’ll be most interested in learning the average selling price achieved in Q2 because this has been continually downward since 2021.
4. Adyen (Ticker: ADYEN) Latest Partnerships
Partnership With noon
Adyen is partnering with noon, a leading e-commerce platform in the Middle East. noon, which began in 2017, has developed a digital ecosystem serving the UAE, Saudi Arabia, and Egypt, and created its own payment infrastructure, noon payments, to support its growth.
This partnership aims to enhance noon’s payment solutions for merchants and customers by integrating Adyen’s comprehensive suite of services, which includes point-of-sale, advanced 3D secure and risk configurations, and shopper insights. The collaboration will help noon accelerate e-commerce innovations and improve the customer experience by streamlining payment processes, reducing fraud, and providing valuable consumer insights.
Source: Adyen IR
My Perspective: By partnering with noon, Adyen gains a strong foothold in the rapidly growing UAE, Saudi Arabia, and Egyptian markets. By partnering with an e-commerce platform, Adyen will handle a significant volume of transactions across noon's digital ecosystem.
Decathlon Hong Kong Partnership Update
Back in April, Decathlon Hong Kong and Adyen announced a new partnership and this week Kent Lam, Head of Technology at Decathlon Hong Kong, sat down with Frontier Enterprise, to discuss their payments transformation and how its partnership with Dutch payment company Adyen eliminated many business hurdles.
Decathlon Hong Kong faced significant challenges with its previous payment system, which involved two separate vendors for point-of-sale (POS) terminals and a payment service provider (PSP). This complicated setup led to issues like duplicated charges and overwhelmed customer service due to refund claims. Additionally, the POS systems were becoming outdated, and upgrading them was both costly and uncertain.
To resolve these issues, Decathlon Hong Kong switched to Adyen, primarily because of Adyen's experience integrating with Decathlon's web POS system, Openbravo, and their global contract, which simplified operations. This change eliminated duplicate charges, reduced fraud through better risk management, and lowered transaction fees. Adyen's comprehensive payment solutions covered all of Decathlon Hong Kong’s payment channels, including online, in-app, and physical stores, and supported Apple Pay and upcoming Google Pay.
Source: Frontier Enterprise
My Perspective: By addressing various aspects of payment processing and management, Adyen's solution helped Decathlon Hong Kong save money through increased efficiency, reduced errors, lower fees, and improved customer satisfaction. This comprehensive approach to payment management demonstrates why partnering with a unified commerce solution like Adyen can be financially beneficial for merchants.
5. Amazon (Ticker: AMZN) Secures $1.3 Billion Cloud Deal With Australia's Spy Agency
Amazon Web Services (AWS) is developing a top-secret cloud for the Australian government, aimed at enhancing information sharing, analysis, and defense communications. Australia will invest at least AUD$2 billion (US$1.3 billion) over the next decade for the establishment and operation of this cloud. The initiative involves a strategic collaboration between the Australian Signals Directorate (ASD) and AWS, with a focus on cybersecurity.
The cloud will facilitate improved collaboration within Australia’s intelligence and defense sectors and with U.S. partners, supporting military operations and integrating advanced technologies like AI and machine learning. The move comes in response to increasing cyberattacks on Australian government entities and companies, highlighting the need for robust cybersecurity measures.
Source: Benzinga
My Perspective: This is a significant win for Amazon as this deal establishes AWS as a trusted partner for Australia's top-secret intelligence data, positioning the company as a key player in national security infrastructure. Winning a contract to handle top-secret intelligence data demonstrates AWS's ability to meet the highest security and compliance standards, potentially opening doors to similar contracts globally.
6. Auto Partner (Ticker: APR.WA) June Sales Update
APR reported June 2024 revenue of PLN 351.6 million, representing an increase of 11% YoY. APR’s Q2 2024 revenue is PLN 1.063 billion representing an increase of 13% YoY.
Source: Auto Partner IR
My Perspective: The June sales update has culminated in a disappointing quarter of revenue growth, falling well below the 20% management target. Furthermore, margins are expected to be compressed for the remainder of 2024 due to minimum wage increases and FX headwinds that I have discussed previously. I am expecting Q2 earnings to be quite poor. Management’s explanation for the growth slowdown will be interesting.
7. Nubank (Ticker: NU) The Secret Behind its Mobile Service Offering
Earlier this year, Nubank launched mobile services, initially perceived as a cross-marketing strategy to generate additional revenue. Nubank has a large customer base, making the integration of mobile plans a potentially lucrative addition.
Nubank partnered with Gigs, likened to the "Stripe of mobile," to create an ecosystem where banking acts as a central hub for various value-added services. Hermann Frank, CEO of Gigs, emphasizes the strategic advantage of bundling mobile plans to convert users into regular subscribers, promote premium features, and offer a comprehensive service ecosystem.
Gigs enables businesses to quickly launch their own mobile services by providing embeddable and programmable phone plans, significantly reducing development time from 18 months to just days. For example, Nubank offers travel SIMs through its app with a simple, streamlined process.
Source: Tearsheet
My Perspective: This strategic move positions Nubank as more than just a bank, transforming it into a comprehensive digital ecosystem that caters to various aspects of its customers' lives. By bundling financial services with mobile connectivity, Nubank is creating a more integrated and valuable offering for its users, potentially leading to increased customer acquisition, retention, and long-term growth.
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Happy investing
Wolf of Harcourt Street
Contact me
Twitter: @wolfofharcourt
Email: wolfofharcourtstreet@gmail.com
Thanks for this Wolf. Regarding Shopee, I would imagine that many of their end-sellers are based out of China too (like in most SEA countries). Probably similar to Lazada. So if true, the tariffs would apply equally to those sellers i.e. not really a competitive advantage to Shopee? Would love to see some data on end sellers to see the relative impact (though don't think this info exists?)