Macquarie Equity Research

19 October 2023

Software & Services

Cross-border e-commerce Asia

China giants spearhead digital disruption

Ellie Ari
Key Points Jiang Jahja

• Chinese e-commerce expansion is set to disrupt incumbents globally

as the digital shopping evolution accelerates. Logistics is a core
Zhiwei Danny
competency. Foo Lee
• The US offers margin upside, though the glass celling could be lower.
Shifting regulatory sands in ASEAN could derail aggressive new Global EC market landscape
entrants. US$ bn
• We like BABA and PDD given comprehensive global retail presence. SE is 8,000
our tactical long idea but still subject to competition uncertainty. 6,000

4,000

• Chinese giants are disrupting the global landscape: Global e-commerce 2,000
is undergoing a seismic shift as Chinese e-commerce giants shape new
0
shopping habits, introducing "value-for-money" products across borders 2017 2023E
into local markets. A highly fragmented market will enable exponential Alibaba Amazon JD PDD
Bytedance Walmart Shein Apple
growth, with margin expansion potential. While there are many moving eBay Shopee Rakuten Others
parts amid evolving models and regulations, this report aims to help
Source: eMarketer, Company data, Macquarie
investors assess the opportunities and risks as Chinese companies
Research, October 2023
expand their global footprint.
See our latest update reports on SE and GOTO
• Entering the US, ASEAN, and Europe: TikTok Shop, Temu and Shein are
entering new markets with cross-border merchandising and engaging Cross border E-commerce names
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social features. In turn, incumbents are actively defending core markets: Company Ticker Rating TP* CP* TSR
in the case of Lazada adopting a more focused strategy in Thailand/ Alibaba BABA US OP 147.9 83.9 76%
PDD PDD US OP 126.0 104.9 20%
Philippines, and AliExpress/Amazon upgrading fulfilment capability in the SEA SE US OP 61.0 46.7 31%
Eurozone. Superior purchasing power in the US could translate to margin Grab GRAB US OP 4.5 3.4 31%
Goto GOTO IJ OP 74.0 63.0 17%
upside as platforms scale up. Protective regulations should raise the Buka BUKA IJ OP 300.0 210.0 43%
entry barrier in ASEAN countries, though price sensitive consumers and ZOZO 3092 JP N 3,030.0 2,877.0 5%
Mercari 4385 JP OP 4,100.0 3,078.0 33%
engaging shopping behaviours could still translate to greater competitive Coupang CPNG US OP 22.0 17.8 23%
Naver 035420 KS OP 260,000.0 186,300.0 40%
vulnerability.
• Reshaping the last mile and hyperlocal delivery: Infrastructure, supply Source: Bloomberg, Macquarie Research, October
2023. Closing prices as of 18 October 2023. TP and CP
chains and consumers are the textbook elements for an "e-commerce
in local currencies.
foundation", which paves the way for the next global expansion cycle.
As the market remains in an early development stage with most new
entrants being loss leaders, we think infrastructure, especially fulfilment
capability, is the key parameter in assessing platform competency to
drive high-quality growth. For most cross-border platforms, fulfilment
is a critical component which accounts for 18-25% of total sales. FBA
(Amazon), Cainiao (Alibaba), and J&T Express (unlisted) are key enablers.
• Picking winners on an evolving world map: We believe Alibaba is best
poised to capture cross-border opportunities through both flagship
marketplaces such as Lazada and AliExpress, and Cainiao smart logistics.
We anticipate continued growth momentum for Temu, which could
support a robust revenue outlook for Pinduoduo. We view ASEAN
incumbents the major beneficiaries of the recent regulatory changes,
with a pecking order of SE>GOTO. Japan and Korea will remain tough
markets to penetrate amid market consolidation towards leading local
players.
• Risks: Heightened geopolitical uncertainty may severely affect tax
schemes, exchange currency, and cost of operations.

For important disclosures and analyst certification, refer to page 20 or go to www.macquarie.com/research/disclosures. 1

 Macquarie Equity Research Cross-border e-commerce

Table of contents

Executive summary
ASEAN: Regulation to raise entry barriers
United States: Momentum picks up
European Union: Logistics the breaking point
Japan and South Korea: Harder to break in
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19 October 2023 2
 Macquarie Equity Research Cross-border e-commerce

Executive summary
New players are making rapid
moves into the $6.3tn global Global e-commerce: a US$6.3tn market ripe for disruption
e-commerce market. • The Covid pandemic and geopolitical upheaval have forced international e-commerce
players to refine their operational and logistical prowess at breakneck speed. Operational
diversification, more mature infrastructure for online payment and fulfilment, and broader
merchandising accessibility support better transaction flows across borders. From PDD
affiliate Temu's exponential expansion into more than 40 international markets, to TikTok
Shop's disrupting social commerce model that aggressively accumulated consumer
mindshare, the industry landscape has evolved rapidly.
• Amid gradual economic recovery and burgeoning cross-border ecommerce demand, we
see a wide variety of growth opportunities ahead. Enormous change to market dynamics
has driven global e-commerce gross merchandise value (GMV) expansion from $2.4tn in
2017 to $6.3tn in 2023, per eMarketer. Third-party Juniper Research forecasts the global
e-commerce user base to expand from 3.1bn in 2022 to 4.4bn by 2027, representing a
7.2% CAGR in the five-year period.

Figure 2 - Global major e-commerce GMV: key competitors

US$ bn
7,000

6,000

5,000

4,000

3,000

2,000

1,000

-
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2017 2018 2019 2020 2021 2022 2023E

Alibaba Amazon JD PDD Bytedance Walmart Shein Apple eBay Shopee Rakuten Others

Source: eMarketer, Company data, Visible Alpha, ecommerceDB, Macquarie Research, October 2023

Bytedance includes both Douyin and Tiktok shop domestically and internationally.

Shein does not include sales generated from recent acquisition of offline stores.

Figure 3 - E-commerce CAGR 2023-2027 estimates and current penetration rate

2022
Mkt size 9 52 53 14 34 1,040 54 9 2,058 4 144 12 162 106
US$ bn
%
25% 35%
30%
20%
25%
15% 20%
10% 15%
10%
5%
5%
0% 0%

Ecommerce growth 2023 - 2027 CAGR Online penetration rate 2022 % (RHS)

Source: Country censuses, Google, Bain, Temasek, Centre for Retail Research, Statista, Macquarie Research, October 2023

19 October 2023 3
 Macquarie Equity Research Cross-border e-commerce

An evolving world map: ASEAN, US, Europe, and more

We dissect the world map by • In this section, we analyse four key markets: Southeast Asia, United States, Eurozone, and
four key regions: ASEAN, US, Japan & Korea to understand the evolving e-commerce market landscape and key market
EU, and JP & KR. drivers.
• We conclude that ASEAN, especially Vietnam, remains the most competitive region
albeit we see regulations evolving here. While monetisation still sees upside potential, the
emerging threat from TikTok Shop (TTS) and Temu is likely to pose downward pressure on
platforms' profitability given urgency to defend market share in the near term. Indonesia
is a key moving part, with a protectionist government issuing new policies to protect local
players and small- and medium-sized merchants.
• We consider Amazon still has the strongest service moat in the United States, though
discretionary and longer-tail categories will continue to see competitive pressure from
Temu and Shein. We are actively monitoring TTS's latest move into a full closed-loop e-
commerce model, which could see an impact on branded merchants and younger consumer
groups.
• In the Eurozone, we believe logistics capability is a key distinguishing factor among
platforms, which could help gain incremental user mindshare. Spain, among all countries,
sees the fiercest competition and growth upside.
• We think Japan and South Korea remain the two most challenging markets for foreign
platforms to enter given loyal consumer mindshare for offline and domestic brands.

Figure 4 - World map of major e-commerce players

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Source: Company data, Macquarie Research, October 2023

19 October 2023 4
 Macquarie Equity Research Cross-border e-commerce

ASEAN: Regulation to raise entry barriers

A targeted approach may
• With e-commerce gradually recovering following the initial reopening hype towards offline,
we see competitive intensity picking up in Southeast Asia with the emergence of TikTok
work better than SuperApps.
Shop (TTS), whose social-empowered features have huge appeal with local consumers.
However, this dynamic is subject to change with evolving regulations as local governments
turn more cautious over protecting local enterprises, which could raise the near-term entry
barriers for new disruptors to break in.
• We acknowledge local incumbents (e.g., SE, Lazada, GOTO) as major beneficiaries in the near
term, anticipating easing competitions in Indonesia to drive GMV/market share upside in
coming quarters. Meanwhile, we view ASEAN countries as a tactical market with relatively
high level of competitive vulnerability as consumers' shopping behaviours irreversibly
reshaped by engaging social platforms and low-pricing merchandising supplies.
• At the current stage, Vietnam is a key battleground at the centre of TTS' e-commerce
strategy after its recent suspension in Indonesia. Shopee recently repivoted its strategy
from profitability to growth and has stepped up subsidies to seek incremental growth
opportunities. The Philippines and Thailand are relatively stable, with Lazada showing signs
of strengthening in recent periods.

Figure 5 - ASEAN: E-commerce GMV trends by country

US$ bn
140
11% 22-25E CAGR
3%
120 14%
8%
100 4% 11%
9%
80 4% 9% 13%
8%
9% 12%
60
4%
9%
9%
11%
16%
14% ...
40 7%
51%
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14%
52%
20 48%
56%
0
2020 2021 2022 2025E

Indonesia Thailand Philippines Malaysia Vietnam Singapore

Source: Momentum works, Google, Bain, Temasek, Macquarie Research, October 2023

"SuperApps" no longer the ultimate solution

• Chinese internet giants are well recognised for their SuperApp model. For Alibaba, Tencent
and Meituan, the key to this model's success is through operating a wide spectrum of
verticals on the same value chain while standardising strategies top-down.
• However, this model does not work well in SEA, especially given very different demographic
dynamics that require greater operational granularity and localised understanding. ASEAN's
archipelagic geography also raises the bar in terms of fulfilment capability, thus leading to
higher costs.

19 October 2023 5
 Macquarie Equity Research Cross-border e-commerce

Figure 6 - ASEAN: GDP growth 2017-22 CAGR by Figure 7 - ASEAN countries: Gross national
country income (GNI) and gross savings in 2022
% US$
8.0% 120,000 60%

7.0% 100,000 50%

6.0%
80,000 40%
5.0%
60,000 30%
4.0%

3.0% 40,000 20%

2.0% 20,000 10%

1.0%
0 0%
0.0% Singapore Malaysia Thailand Indonesia Vietnam Philippines
Vietnam Indonesia Philippines Malaysia Singapore Thailand
GNI per capita, PPP Gross savings % of GNI
Real GDP growth 2017 - 2022 CAGR

Source: World Bank, Macquarie Research, October 2023

Source: International Monetary Fund, Macquarie Research, October 2023

• Following depressed performance among ASEAN e-commerce platforms after the initial
Initial progress from a reopening, we have seen a strategic shift among local players as they adopt more targeted
targeted strategy approaches. For example, Alibaba's Lazada has placed its strategic markets in Thailand and
Malaysia, while remaining disciplined in Indonesia's competitive market, which has lead to a
better-than-peer growth outlook.

Regulation becomes a protection shield for Indonesian local players... for now
• According to the Indonesia Ministry of Trade, Indonesia's regulators are separating social
media and e-commerce operations by requiring platforms to obtain standalone ecommerce
Protectionist instincts of licences. As TTS already is a channel with 2m sellers and 125m MAUs in Indonesia, we
Indonesia's regulators are anticipate big changes to its businesses model ahead. As of 4 October, TTS officially halted
blocking TikTok Shop's e-commerce operations in Indonesia amid new regulations (link). Other regulatory changes
aggressive expansion, but the
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include the following:

market remains competitive.
⇒ Setting a minimal price of US$100/unit for imported finished goods that are sold
directly by merchants through cross-border ecommerce platforms.
⇒ Constructing a list of imported goods that are allowed to enter Indonesia directly via e-
commerce platforms.
⇒ Establish special requirements for foreign traders on domestic marketplaces.
⇒ Restriction of marketplaces and social commerce acting as producers of goods.
⇒ Social commerce is prohibited from facilitating payment transactions on its electronic
system and can only offer/promote goods and/services.

19 October 2023 6
 Macquarie Equity Research Cross-border e-commerce

Figure 8 - ASEAN: Market share of major Figure 9 - ASEAN: Market share GMV among
ecommerce platforms, 2022 major platforms
US$ bn
100% 4% 4% 4% 4% 3% 1% 140
5% 4% 11%
90% 6% 19% 3%
10% 120 4%
80% 36% 3%
40% 23% 4% 18%
70% 35% 100 3% 16%
35% 5% 6%
60% 4%
80 5% 18% 12%
50% 21%
18% 4%
40% 10% 78% 1% 19%
60 20%
30% 60% 63% 7%
6% 24%
56% 53%
40 19%
20% 36%
24% 49%
10% 48% 47%
20 49%
0% 44%
Indonesia Thailand Philippines Vietnam Malaysia Singapore -
Shopee Lazada Tokopedia Bukalapak Amazon 2020 2021 2022 2023E 2024E

Tiki VN Sendo Tiktok shop Blibli Shopee Lazada Tiktok shop Tokopedia Bukalapak Others

Source: Momentum Works, Macquarie Research, October 2023 Source: Momentum Works, Visible Alpha, Macquarie Research, October
2023

2023E/24E market share data is based on our in-house estimates, which

captures TTS's recent e-commerce exit in Indonesia.

Figure 10 - Category mix by GMV of major Figure 11 - Shopee GMV contribution by cross
players border and domestic merchants
% % 1%
100% 100% 4%
12% 10% 7%
90% 90% 25%
80% 80%
70% 70%
60% 60%
50%
50% 96% 99%
40% 88% 90% 93%
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40% 75%
30%
30%
20%
20%
10%
10%
0%
Douyin (China) Shopee Lazada 0%
Singapore Philippines Malaysia Vietnam Thailand Indonesia
Fashion & Accessories Home & Living Health & Beauty
Domestic GMV Cross border GMV
Electronics & Appliances Babies & Toys Others

Source: Momentum Works, MQ channel check, Macquarie Research, Source: MQ channel check, Macquarie Research, October 2023
October 2023

• TTS re-strategises in Indonesia, though still aggressive in Vietnam. Looking at Shopee's

GMV contribution generated from cross-border merchants in Indonesia (see Figure 11),
TTS' supply limitations could be manageable as platforms are already heavily skewed to
local suppliers. On the other hand, TTS's more imminent target is to obtain an e-commerce
operational licence in Indonesia that will facilitate direct e-commerce transactions. That
said, our channel checks suggest TTS will convert back to external links (ad sales) for
time being while actively negotiating with local authorities on further solutions. Ongoing
discussions also point to the possibility for TTS to potentially launch a separate app for e-
commerce operations before year ends.

19 October 2023 7
 Macquarie Equity Research Cross-border e-commerce

Take rate remains a key • Don't forget Temu. Our recent channel checks suggest that PDD's Temu may be planning
growth driver for ASEAN. a full launch in ASEAN markets and directly benchmark TTS in Vietnam. Temu already
Thailand and Vietnam seen has entered this region, launching services in the Philippines (26 August), and Malaysia
the most take rate upside. (8 September), though investments seem to have been captured under a very prudent
manner given regulatory uncertainty.
⇒ Temu operates a consignment model that primarily replies on cross-border suppliers,
which draws a material difference compared to local marketplace models such as
Shopee and Lazada. While operating metrics remain unclear, we believe Temu's superior
execution and supply-chain capability could accelerate its expansion in ASEAN upon
regulatory approvals.
⇒ Our interviews with Temu merchants indicate the perceptions of Temu from merchants
and suppliers have changed from being an inventory clearing channel, to a new
meaningful growth driving engine aside from Amazon and Walmart. On the other hand,
current regulatory constraints on cross-border sales will likely be key bottlenecks for
Temu to break into Indonesia.

Lazada looks to capture the most take rate upside

• Take rates are a reflection of merchants' return, as e-commerce platforms offering
incremental revenue streams beyond offline operations. That said, we believe there is still
room for take rate expansion in ASEAN markets given rising online adoption and operating
efficiency. We expect rising take rates to benefit mainstream platforms such as Lazada and
Shopee, which should drive faster revenue growth against GMV and offset competitive drag
in coming periods. Since late 2022, take rates have expanded across key players (see Figures
12 and 13).
• For example, Lazada has caught up with Shopee on commission fees in most regions.
With additional value-added services (VASs) offered to merchants and continued cost
optimisation, we think the monetisation rate will expand and contribute to the narrowing of
segment EBITDA losses in longer term.
• Notably, take rates in Thailand and Vietnam have increased again in recent quarters, which
could lead to relatively higher growth upside for Lazada given its larger exposure.
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Figure 12 - LazMall and Shopee Mall: take rate comparison

Indonesia1 Thailand Philippines1 Malaysia Vietnam1 Singapore1
LazMal 2.50% - 6.50% 5% - 7% + VAT 3% - 7% 5% - 9% + SST 1.21% - 7.7% 3.21% - 5.35%
Shopee Mall 2.50% - 6.50% 5% - 7% + VAT 3.36% - 6.72% 2% - 9% + SST 1.82% - 7.7% 3.24% - 5.40%

Source: Company websites, Macquarie Research, October 2023

Tagged rates include VAT.

Figure 13 - ASEAN: E-commerce platform take rate comparison

Indonesia1 Thailand Philippines1 Malaysia Vietnam Singapore
Effective date Apr-23 Oct-23 May-23 Jan-23 Sep-23 Jun-22
Lazada
New rate 2.8% - 4.0% 3.0% - 5.0% + VAT 3.5% - 5.0% 2.5% - 4.0% +VAT 4.0%1
Marketplace 2% + VAT
Old rate 2.50% 3.0% - 4.0% + VAT 2.5% - 4.0% 2.0% + VAT 3.0%1
Effective date Feb-23 Oct-23 Jan-23 Jan-23 Sep-23 May-22
Shopee
New rate 2.5% - 6.5% 3.0% - 5.0% + VAT 3.5% - 5.0% 2.5% - 4.0% + VAT 4.0%1
Marketplace 2% + VAT
Old rate 1.25% - 4.0% 3.0% - 4.0% + VAT 2.00% 2.0% + VAT 3.0%1
Effective date Jun-23 Dec-22 Jun-23 Mar-23 Jul-23 Jun-22
1 1
Tiktok shop New rate 1.9% - 4.3% 4.0% 0.7% - 2.5% 2.0% + VAT 2.0%
No fee
Old rate 1% + 2,000 Rp No fee No fee No fee No Fee

Source: Company websites, Macquarie Research, October 2023

Tagged rates include VAT.

19 October 2023 8
 Macquarie Equity Research Cross-border e-commerce

Follow a quality rank: Lazada (BABA) > Shopee (SE) > GOTO
We also think BABA's Lazada • ASEAN's competitive landscape is rapidly evolving amid TTS disrupting the value chain and
being most defensive with reshaping consumer behaviour. Consumers are most sensitive to price, especially in lower-
higher monetization upside and middle-income groups. They are therefore not particularly loyal to platforms and will
from core markets. shop on whichever platform that provides the most incentives, while being attached to
engaging content. According to a consumer study conducted by Lazada (see Figure 14),
ASEAN consumers rank pricing as the top reason when buying online, and fulfilment quality
less so during decision-making process.
• That said, we foresee a relatively high level of competitive vulnerability in ASEAN markets
ahead, albeit evolving regulations. We think platforms with a differentiated strategy and/or
with better infrastructure are marginally safer amid drastic market changes. We see Lazada
(BABA US) as more defensive, given its diversified operations and greater monetisation
upside.
• With TikTok Shop suspending services in Indonesia, we expect competitive pressure to
ease for the all local incumbents, potentially sparking market share upside in the near
term. Shopee (SE US) and Tokopedia (GOTO IJ) are our tactical long ideas in the ASEAN e-
commerce market.
• See our latest update reports on SE and GOTO.

Figure 14 - Price is top of mind for ASEAN online Figure 15 - Cost matters the most with regard to
shoppers e-commerce platform choice throughout ASEAN
(% of
respondents)
45.5
Least --------------> Highest

45.0

44.5

44.0

43.5
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43.0

42.5
SG MY TH ID PH VN
42.0

41.5
Low prices Affordable shipping Ease of search Convenience Delivery costs Product prices Delivery time
Reliability of reviews Product description
Source: Lazada Consumer Study 2022, Macquarie Research, October 2023
Source: Blackbox Research, Macquarie Research, October 2023

19 October 2023 9
 Macquarie Equity Research Cross-border e-commerce

United States: Momentum picks up

• For years, the US has been less attractive for cross-border e-commerce platforms relative
to other markets due to their much higher entry barriers in both user mindshare and
operating expenses (traffic acquisition cost and cross-border fulfilment). Compared to
ASEAN, where customer acquisition costs (CACs) only hover in the US$2-5/head range,
CACs in the US hover in the $30-40/head range on average and could top US$50/head
during peak seasons.
• Interestingly, the dynamic has shifted since Shein, the leading apparel retailer, first entered
the US market in 2017, and has further accelerated since September 2022 when Temu
debuted with large-scale campaigns and interactive new business formats.

Figure 16 - US: E-commerce GMV and Figure 17 - US: E-commerce market share by
penetration trends companies
US$ bn %
1,200 16.0% 100%

14.0% 90%
1,000 36%
80%
12.0% 46%*
70%
800
10.0% 60% 7%
4%
600 8.0% 50% 4% 4%
4%
40% 6%
6.0%
400
30%
4.0% 48%
20% 38%
200
2.0% 10%
- 0.0% 0%
2017 2018 2019 2020 2021 2022 2018 2022

US Ecommerce GMV US Ecommerce penetration % (RHS) Amazon Walmart Apple eBay Target Others

Source: US Census Bureau, Macquarie Research, October 2023 Source: eMarketer, Macquarie Research, October 2023
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*Others in 2022 include Shein, Temu, Tiktok Shop, AliExpress, etc.

Disruptions are on the way

After one-year of its launch, • Temu, the overseas arm of PDD (PDD US), entered its first market in the US at the
Temu remains as most beginning of fourth quarter 2022, and has since set its footprints all over the world. Temu
downloaded e-commerce now has a presence in nearly 40 countries/regions, with Malaysia being the latest entrance
apps in the US with GMV in September 2023. We expect Temu's US operations to generate ~US$10bn GMV in 2023,
approaching that of Shein. with global GMV reaching US$13-15bn.
⇒ Looking at the US market, Temu was expanding aggressively and reached the most
downloading shopping app in the US since Oct 2022, surpassing Amazon and Shein .
According to Sensor Tower, Temu recorded more than 74 million downloads in 2Q23
globally.
⇒ The company uses its aggressive advertising strategy to quickly gain market share in
US. According to transaction data, Temu surpassed Shein's GMV in May and has gained
further ground since then (Figure 19). The platform leverages its already-matured supply
Merchants' profitability on
chain capabilities in China to offer a very wide range of products at affordable prices to
Temu surprised us on the
its global customers.
upside.
⇒ During our recent channel check (link), what surprised us the most was the narrow
margin difference between Amazon and new channels. The expert shared that core
operations on Amazon Marketplace remains quite lucrative with 10-12% operating
margins. Temu and Shein, on the other hand, can also generate ~8% operating margins,
as platforms currently subsidize the front-layer fulfilment and allow key accounts (KAs)
to participate large-scaled marketing campaigns for free. Interestingly, the expert
seemed to be fully aware of a potential fee increase from Temu in the future, but
believe KAs would still have much higher room for growth and operating leverage. Small-
to-medium enterprises (SMEs), on the other hand, could see more cost pressures under
a more aggressive bidding mechanism.

19 October 2023 10
 Macquarie Equity Research Cross-border e-commerce

Figure 18 - Unique visitors to major e-commerce Figure 19 - Temu sales overtaking Shein in US
platforms in US
Millions
80
70
60
50
40
30
20
10
0

Temu Shein Aliexpress Wish

Source: Earnest Analytics, Vela Gamma transaction data, October 2023

Source: eMarketer, Comscore Media Metrix Multi-Platform, Macquarie

Research, October 2023

• Shein launched operations in the US back at 2017 and is now reportedly generating US
Shein: a rising disruptor in $8bn GMV in the market during 2022, about one-fourth of its global GMV.
discretionary categories.
⇒ The company started its rapid growth since 2019 thanks to the rise of Tiktok and
the pandemic disruptions. Shein's targeted marketing strategy based on social media,
a large inflow of daily new designs, and affordable prices have attracted a sizable,
influential group of Gen Z buyers.
⇒ Meanwhile, instead of just selling 1P (first-party) fashion products, Shein is now
expanding and transitioning into a marketplace, allowing 3P (third-party) merchants to
provide all other products categories. In August 2021, Shein acquired a one-third stake
in Forever21's parent SPARC Group. Under the deal, Shein would set up "shop-in-shops"
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inside Forever21's physical stores as it seeks to break into offline sales.

Figure 20 - Shein: Global GMV and %YoY growth

US$ bn
90 250%
80
70 200%

60
150%
50
40
100%
30
20 50%
10
0 0%
2019 2020 2021 2022 2023E 2024E 2025E

Shein GMV GMV YoY % (RHS)

Source: Wall Street Journal, Financial Times, Macquarie Research, October 2023

19 October 2023 11
 Macquarie Equity Research Cross-border e-commerce

See our recent channel check • TikTok Shop (TTS), once again, is making moves in the US. After months of testing since
takeaway here: November 2022, together with the suspension of external links and full roll-out of closed-
TikTok - How does TikTok loop ecommerce (link), TTS was officially launched in the US on 12 September.
shape up the global e- ⇒ In China, Douyin, which is TTS's sister app, doubled its GMV share and expanded the
commerce landscape? take rate by more than 3x within one year of closed-loop operations.
⇒ According to the third-party data provider EchoTik and Tabcut, the merchants on
TikTok Shop grew more than 30-fold from 300 in April to more than 10,000 in August.
Monthly GMV reached US$350mn in July; the top category is cosmetics, followed by
women's apparel and electronics.
⇒ With over 150 million TikTok users in US and the non-stop virality of the platform, TTS
could well be growing at an enormous pace. Bloomberg previously reported the global
annual GMV target of US$20bn (link), within which we estimate TTS's US annual GMV to
We think local leaders such be range from US$5-7bn in 2023E.
as Amazon and Walmart
appear to be mostly immune Asset-heavy mainstream channels bode well but merchant overlap picks up
from competition, for now. • For now, we believe Amazon is still mostly immune from competition, with Amazon noted
healthy Prime members trends in recent quarter, benefiting from its sticky mindshare
and sophisticated infrastructure. Interestingly, our recent channel check suggested that
most Temu and Shein suppliers are already existing merchants for the likes of Amazon and
Walmart, which points to merchants' evolving mindshare to involve into a more diversified
omni-channel operations.
• While mainstream platforms have made a push to defend competition by rolling out
policies such as "Two-Choose-One" to eliminate overlap merchandising, merchants have
been actively developing dedicated product lines to capture potential opportunities from
emerging channels.

Figure 21 - Amazon Prime: Number of members Figure 22 - Amazon: GMV and %YoY growth
and %YoY growth
US$ bn
900 45%
Million
For the exclusive use of Saidatul Hassan (saidatulfaeeqah@pnb.com.my) at Permodalan Nasional Berhad

300 30% 800 40%

700 35%
250 25%
600 30%
200 20% 500 25%
400 20%
150 15%
300 15%
100 10% 200 10%
100 5%
50 5%
- 0%
2019 2020 2021 2022 2023E
- 0%
2019 2020 2021 2022 2023E Amazon GMV YoY% (RHS)
Amazon Prime members YoY% (RHS)
Source: Company data, Visible Alpha, October 2023
Source: Company data, Visible Alpha, October 2023

Surprisingly, US could be quite profitable

We think US offers the
• Just as investors perceive the US as one of the most expensive markets in which to
highest margin upside
operate, the strong consumer paying power and average revenue per user (ARPU) potential
potential for platforms
have been positive engines to support a better margin outlook. We estimate the average
with superior purchasing
order value on Shein could reach approximately US$70-75 in the US, far above the US$3-5
power and value-for-money
in ASEAN and the ~US$15 industry average in China. As shown in Figure 23 below, Shein
demand.
already achieved profitable growth during the pandemic at a group level and is on track to
further expand margin profile in coming periods, mainly benefited from its successful US
operations.

19 October 2023 12
 Macquarie Equity Research Cross-border e-commerce

• Additionally, the rise of Temu has stimulated exponential growth for cross-border logistics
couriers, which have subsidised Temu aggressively to accumulate volume share and
establish a global logistics network. According to our estimate, J&T Logistics, the major
courier for Temu, is subsidising the platform 30-50% of shipment costs, which significantly
alleviated Temu's cost burden in fulfilment.
• Our unit economies analysis (Figure 24) suggests that Temu's loss ratio for US operations
has already narrowed significantly from -55% in 1Q23 to approximately -20% in recent
months, contributed by increased basket size (as consumers purchasing multiple items
within one transaction). If Temu could further close the gap with Shein in terms of
order value, we believe there is room for meaningful margin upside ahead for Temu's US
operations.

Figure 23 - Shein: Profitability trends (2021-25E) Figure 24 - Temu unit economics 2023E
US$ bn
70 14%
37% Rev CAGR 23 - 25E
60 12%

50 10%

40 8%

30 6%

20 4%

10 2%

0 0%
2021 2022 2025E

Shein Revenue Shein Net profit Shein Net margin

Source: Wall Street Journal, Financial Times, Macquarie Research, Source: MQ channel checks, Macquarie Research, October 2023
October 2023
For the exclusive use of Saidatul Hassan (saidatulfaeeqah@pnb.com.my) at Permodalan Nasional Berhad

Regulation remains uncertain

• The US government looks to eliminate the tariff exemption under the de minimis rule, which
exempts imports valued at US$800 or less, according to Reuters. We believe such change
of tax exemption rules will inevitably have an impact on e-commerce platforms, not only on
new channels but also established ones such as Amazon and Walmart.
• In the case of Amazon, the platform has relied on cross-border suppliers for many years,
especially for its marketplace operations. In fact, according to research done by EcomCrew
(link), approximately 60% of the 3P merchants on Amazon are from China, which compares
with approximately 40% in 2021 and 30% in 2020.
• Despite their fast growth and popularity, Temu and Shein have been the focus of intense
scrutiny and accusations in the US. Both apps were being accused of potential data risks (by
US-China Economic and Security Review Commission) and forced labour supply chain (by
Select Committee on the CCP). While these concerns could result in a total ban of the apps
in the US, we think given the lack of evidence and slow legislative progress of TikTok bans in
various US jurisdictions, there will be minimal impact to the platforms.

19 October 2023 13
 Macquarie Equity Research Cross-border e-commerce

European Union: Logistics the breaking point

• Europe is not unified when it comes to e-commerce developments. Platforms need to
not only be tactical about this multi-market playground given very different infrastructure
setup (e.g., technology, payment, logistics), but also pay close attention to each individual
country's mindshare and demographics. That said, online penetration and spending power
varies materially across key countries, with the UK remains the largest market contributor,
while Spain is showing upward growth momentum.

Figure 25 - E-commerce online penetration rate trends by major EU country

%
35%

30%

25%

20%

15%

10%

5%

0%
UK Germany France Italy Spain Netherlands

2017 2018 2019 2020 2021 2022

Source: Centre for Retail Research, Macquarie Research, October 2023

Figure 26 - Number of online consumers and Figure 27 - EU e-commerce: Market contribution

ARPU in major EU countries in 2020 by country in 2022
Millions
70 1,200
For the exclusive use of Saidatul Hassan (saidatulfaeeqah@pnb.com.my) at Permodalan Nasional Berhad

60 1,000
Others
50 UK
800 28%
28%
40
600
30
400
20
10 200
Netherlands
- - 5%
Spain Germany
5% 18%
Italy
6% France
10%
Online consumers ARPU EUR (RHS)

Source: CBRE, Euromonitor, Macquarie Research, October 2023

Source: Postnord, Macquarie Research, October 2023

A quality-oriented market; logistics the key deal breaker

EU consumers tend to show much stronger preference towards high-quality local brands,
while being relatively less price-conscious compared to the rest of the world. A survey by the
International Postal Corporation indicates a negative correlation between the consumers’
desire to make cross-border purchases and the amount of additional cost being charged.
Logistics capability is a core The survey result suggests that 70% of the respondents tend to abandon the cross-border
competency for cross border option when additional charges reach 10 euros.
platforms.
• Shein entered the EU in the early 2010s and has expanded in recent years. While no
aggregated Europe performance data is available, multiple local headlines indicate Shein's
strong momentum in multiple countries.
⇒ UK: According to the filings from Companies House, Shein recorded a total of GBP1.1bn
GMV in the UK from September 2021 to December 2022, accounting for a low-teen
percent of its global GMV, according to our estimates. Shein is also reportedly in talks
AE Choice has made a to acquire Missguided clothing brand and extend reach towards offline retail market in
significant breakthrough in Europe
the Eurozone since early
19 October 2023 14
 Macquarie Equity Research Cross-border e-commerce

2023, which is a key driver ⇒ Spain: According to Kantar, Shein has become the second-largest platform in Spain in
for Alibaba's accelerated terms of user base, only behind Amazon. The total number of users increased by 40%
international segment YoY and reached ~4.5 millions over the 12 months period from Jun 2022.
growth. ⇒ France: According to Joko, Shein has ten-folded its GMV in France since the beginning
of 2020 to mid-year 2023. The average order value (AOV) was at about €53, higher than
€43 for Zara and €37 for H&M.

• AliExpress (AE) launched its new "Choice" service in early 2023 that offers speedy delivery
and an improved user experience. The program operates similar Temu-like consignment
model, while providing free shipping, free returns, and most importantly, shortened delivery
time (3-5 days), which tackles the main issue foreign consumers face when using the
platform. AE recently secured its partnership with Cainiao to further enhance the quality
and efficiency of global fulfilment services.
• Miravia is another Alibaba cross-border product that operates a brand retailer model in
Spain that launched in December 2022, and had reportedly 4x its sales in 2Q23 vs prior
quarter despite of a low base. The platform differentiates itself from AliExpress by targeting
a mid-to-high-end fashion/beauty/lifestyle market, connecting consumers with global
flagship brands. Miravia also opens the platform to local SMEs in Spain and a small portion
of top AliExpress merchants from China. Consider the low penetration rate and highly
fragmented landscape in Spain, Alibaba aims to ride on the growth of the market and
leverage the know-how from AliExpress to further gain market share, and pave the path to
enter other Spanish countries.
• Amazon recently updated its Fulfilled By Amazon (FBA) policy and terminated its "Small and
Light" program, which the company launched in 2015 for third-party sellers offering small
items that cost less than US$12. The program is now being replaced by a new low-price FBA
rate for small items that is US$0.30 per package more expensive than the old program, but
with a service upgrade in high-quality delivery.

Figure 28 - AOV and return rate across major Chinese ecommerce platform in Spain 2Q23

EUR
For the exclusive use of Saidatul Hassan (saidatulfaeeqah@pnb.com.my) at Permodalan Nasional Berhad

60 10%
9%
50
8%
7%
40
6%
30 5%
4%
20
3%
2%
10
1%
- 0%
SHEIN Amazon Miravia Temu AliExpress

Spain AOV Return rate % (RHS)

Source: Fintonic, Macquarie Research, October 2023

Lower-margin market to operate

• Effective 1 July 2021, the European Union abolished the VAT exemptions on products up
to €22, which had heavily affected the sales volume of cross-border ecommerce channels
such as AliExpress and Shein. On the other hand, logistics remain front and centre of e-
commerce platform operations, as most well-established EU players adopting a 1P retailer
model.
• That said, we believe the operational costs in EU are meaningfully higher in than other
markets, potentially diluting the profitability upside for platforms. Our channel check with
merchants also echoed the same view: the average cross-border merchants' margin could
only reach 2-3% in EU since the adoption of new VAT rules, compared to 8-10% in the US.

19 October 2023 15
 Macquarie Equity Research Cross-border e-commerce

Japan and South Korea: Harder to break in

With the likes of AliExpress and Temu making greater push into Japan and South Korea, we
think both remain challenging markets for foreign platforms to entry given loyal consumer
mindshare for offline and domestic brands.
Japan: Already a Japan: Early recognition of Shein, Temu yet to play out
concentrated e-commerce • Highly concentrated: Japan's e-commerce market is highly concentrated, with the three
market, but share further main players -- Rakuten, Amazon, Yahoo Shopping -- dominating about 80% of total B2C
skewed towards leaders. physical GMV in 2022. We have seen increasing brands trying to start operating their own
e-commerce websites due to Covid-19, but as the three main players gained more users
during Covid, their cumulative share of the total e-commerce market increased to more
than 80% in 2022, from less than 60% in 2018. We note that the mindset of Japanese
consumers is relatively hard to change. Demand continues to be pulled towards Rakuten
and Amazon, as it has since the pandemic, while Yahoo Shopping has seen limited gains in
demand.
• From quality to price: Japan used to be similar to Europe in that consumers tended
to choose products that had relatively high quality and were produced in Japan. This
was also one of the reason why ZOZO (3092 JP, Neutral) was able to rapidly improve its
presence back to the 2010s. Since 2022, however, there has been a clear downshift in
spending among younger Japanese consumers. With income increasingly allocated to non-
discretionary needs such as housing and utilities, there is less left over for discretionary
spending. It is within this backdrop that Shein has gained significant popularity among
younger Japanese customers in recent times. While Temu was launched Japan only in July
2023 and do not have much higher recognition, we think there is potential for Temu to
expand its presence under the current macroeconomic environment.
• Potential breakthrough from logistics: One key bottleneck that has depressed the e-
commerce penetration in Japan has been logistics fees. In many instances, consumers
need to pay logistics fees of about ¥700-1,000 (US$4.50-7.00) per package for products
that are only about ¥3,000 (US$20). This has led to a stronger mindshare from Amazon
For the exclusive use of Saidatul Hassan (saidatulfaeeqah@pnb.com.my) at Permodalan Nasional Berhad

at the expense of Rakuten in the past 2-3 years as Amazon provides free shipment with
no minimum order amount hurdle for Prime members. To resolve this bottleneck, local
platforms have been working closely with third-party couriers such as Yamato, Sagawa, and
Japan Post. The Chinese disruptor, Shein, currently provides free delivery for orders over
¥2,000, while Temu provides free delivery with no minimum order size. While both China-
based disruptors' models likely will incur large losses, we believe this could help build market
presence. On the other hand, AliExpress, which charges a normal cross-border shipment fee
from China to Japan, may seem less appealing to consumers, though it could be improved
through its new Choice program.

Figure 29 - Japan: E-commerce GMV and Figure 30 - Japan: E-commerce market share by
penetration trends companies
JPY bn
16,000 10% 100%
90% 16.6%
9% 37.0%
14,000 80% 6.7%
8% 70% 3.1%
12,000 60% 3.8%
2.8% 30.5%
7%
50%
10,000 20.6%
6% 40%
16.1%
30% 14.3%
8,000 5%
20%
4% 21.4% 27.1%
6,000 10%
3% 0%
4,000 2018 2022
2%
2,000
1%
Rakuten* LY Corporation** Amazon Japan*** ZOZO Mercari Others
0 0%
2017 2018 2019 2020 2021 2022
Source: METI, Company data, Macquarie Research, October 2023
Source: METI, Macquarie Research, October 2023 Marketshare against B2C physical good EC market and C2C
market.*Rakuten Ichiba+Rakuma **Yahoo Shopping+Yahoo Auction
+PayPay Furima ***Include both 1P and 3P sales, based on Macquarie
Estimate

19 October 2023 16
 Macquarie Equity Research Cross-border e-commerce

South Korea: Market consolidation underway

South Korea: Local platforms • Highly penetrated market: South Korea has one of the most developed e-commerce
focus on branded merchants, markets in the world, with online penetration at 31%, per KOSIS. Since the early 2000s,
while the impact from new Korea's e-commerce market has seen significant growth, thanks to high credit-card
entrants remains limited. penetration and high-speed Internet. Furthermore, Korea has relatively reliable logistics and
installation processes across a relatively small landmass.
• Fragmentation to consolidation: Despite high penetration, the Korean e-commerce
market is fragmented, with market leader Coupang's market share at only 31%. During the
pandemic, Coupang and Naver emerged as new market leaders in 1P and 3P e-commerce,
respectively. Coupang has been strong in the fast-moving consumer goods (FMCG) category
on the back of strong 1P logistics that provide next-day delivery. Naver, the leading search
platform in Korea, is strong in fashion and discretionary items. As the two leading platforms
are complementary in terms of product categories, we believe market consolidation
around Coupang and Naver should continue. As major offline retailers including SSG are also
committed to online expansion, we believe small-to-medium-size platforms should gradually
lose share.
• Chinese players' entry a potential threat? Interestingly, after being present in the country
for years, Alibaba's AliExpress has recently stepped up marketing campaigns in Korea. With
low pricing and five-day delivery free of charge for most of the products, AE is enjoying
strong traffic momentum in near term. According to third-party tracker App Annie, AE has
been among the five most downloaded shopping apps in South Korea since August 2023.
Although cross-border e-commerce is becoming increasingly popular in Korea, we believe
local players have a clear advantage in delivery time (one day for Coupang and 2-3 days for
typical local delivery) and ease of return. In the long term, Chinese players may win some
market share in discretionary categories with aggressive pricing. In response, Naver is now
focusing more on 1) increasing take-rate by launching solution services; and 2) partnering
with larger brands.

Figure 31 - Korea: E-commerce GMV and Figure 32 - Korea ecommerce market share by
penetration trends companies
For the exclusive use of Saidatul Hassan (saidatulfaeeqah@pnb.com.my) at Permodalan Nasional Berhad

Won tn
180 35% 100%
160 90%
30%
140 80%
25% 70%
120
60%
100 20%
50%
80 15% 40%
60
10% 30%
40 20%
5%
20 10%
0 0% 0%
2017 2018 2019 2020 2021 2022 2023E 2017 2018 2019 2020 2021 2022 2023E

Korea EC retail GMV Korea EC penetration % (RHS) Coupang Naver Kakao SSG Others

Source: KOSIS, Macquarie Research, October 2023 Source: Company data, Macquarie Research, October 2023

19 October 2023 17
 Macquarie Equity Research Cross-border e-commerce

Figure 33 - Comparison table

Company Stock MQ Analyst Rating Target Price Current Price TSR Mkt Cap P/E (x) P/S (x) P/B (x)
Name Code (Local $) (Local $) (%) (US$ mn) 2023E 2024E 2025E 2023E 2024E 2025E 2023E 2024E 2025E
China Ecommerce
Alibaba BABA US Ellie Jiang Outperform 147.90 83.91 76 213,419 9.2 8.2 7.4 1.7 1.5 1.3 1.3 1.1 1.0
PDD PDD US Ellie Jiang Outperform 126.00 104.85 20 132,571 22.9 22.2 18.6 5.2 4.2 3.5 6.5 5.1 5.3
Meituan 3690 HK Ellie Jiang Outperform 197.10 113.70 73 90,705 29.8 21.5 14.5 2.2 1.9 1.6 4.1 4.1 4.1
JD JD US Ellie Jiang Neutral 32.00 26.65 20 41,881 9.6 8.8 7.7 0.3 0.3 0.3 1.3 1.2 1.0
Sub average 17.9 15.2 12.0 2.3 2.0 1.7 3.3 2.9 2.9
ASEAN Ecommerce
SEA SE US Ellie Jiang Outperform 61.00 46.69 31 26,462 25.7 22.7 14.5 2.0 1.8 1.6 4.4 4.1 3.6
Grab GRAB US Zhiwei Foo Outperform 4.50 3.43 31 13,391 nmf nmf 245.0 5.8 4.7 3.8 2.2 2.2 2.1
For the exclusive use of Saidatul Hassan (saidatulfaeeqah@pnb.com.my) at Permodalan Nasional Berhad

Goto GOTO IJ Ari Jahja Outperform 74.00 63.00 17 4,809 nmf nmf nmf 4.7 3.4 2.8 0.6 0.6 0.6
Buka BUKA IJ Ari Jahja Outperform 300.00 210.00 43 1,376 nmf nmf nmf 4.6 3.6 2.9 0.8 0.8 0.8
Sub average 25.7 22.7 129.7 4.3 3.4 2.8 2.0 1.9 1.8
Japan Ecommerce
ZOZO 3092 JP Yijia Zhai Neutral 3,030.00 2,877.00 5 5,989 20.0 19.1 18.8 4.4 4.5 4.2 8.8 7.1 6.8
Mercari 4385 JP Yijia Zhai Outperform 4,100.00 3,078.00 33 3,349 37.5 31.9 26.3 2.7 2.6 2.3 8.2 6.7 6.0
Sub average 28.8 25.5 22.5 3.8 3.5 3.1 6.3 5.2 4.8
Korea Ecommerce
Coupang CPNG US Danny Lee Outperform 22.00 17.83 23 31,804 63.0 36.3 25.8 1.3 1.2 1.0 9.9 7.3 5.5
Naver 035420 KS Danny Lee Outperform 260,000.00 186,300.00 40 22,580 30.4 21.9 18.3 3.1 2.8 2.5 1.3 1.2 1.1
Kakao 035720 KS Danny Lee Neutral 57,000.00 41,800.00 36 13,727 44.0 32.9 26.1 2.2 1.9 1.7 1.7 1.6 1.5
Sub average 45.8 30.4 23.4 2.2 1.9 1.7 4.3 3.3 2.7
Average 29.5 23.4 46.9 3.1 2.7 2.3 4.0 3.3 3.0

19 October 2023 18
 Macquarie Equity Research Cross-border e-commerce

Company Stock MQ Analyst Rating Target Price Current Price TSR Mkt Cap EV/Sales EV/EBITDA (x) ROE (%)
Name Code (Local $) (Local $) (%) (US$ mn) 2023E 2024E 2025E 2023E 2024E 2025E 2023E 2024E 2025E
China Ecommerce
Alibaba BABA US Ellie Jiang Outperform 147.90 83.91 76 213,419 1.3 1.2 1.0 8.8 6.3 4.3 15.9 15.2 14.5
PDD PDD US Ellie Jiang Outperform 126.00 104.85 20 132,571 4.5 3.6 3.1 24.2 20.7 16.7 35.2 27.6 30.0
Meituan 3690 HK Ellie Jiang Outperform 197.10 113.70 73 90,705 2.2 1.9 1.6 42.3 22.9 13.8 16.3 21.1 31.4
JD JD US Ellie Jiang Neutral 32.00 26.65 20 41,881 0.2 0.2 0.2 8.8 6.9 5.4 14.5 14.0 14.2
Sub average 2.1 1.7 1.5 21.0 14.2 10.1 20.5 19.5 22.5
ASEAN Ecommerce
SEA SE US Ellie Jiang Outperform 61.00 46.69 31 26,462 1.8 1.6 1.4 25.7 21.2 12.1 17.3 18.5 26.5
Grab GRAB US Zhiwei Foo Outperform 4.50 3.43 31 13,391 4.1 3.4 2.7 nmf 54.2 18.9 -8.3 -3.4 1.3
Goto GOTO IJ Ari Jahja Outperform 74.00 63.00 17 4,809 3.0 2.2 1.8 -6.4 -18.6 19.3 -9.8 -4.7 -1.0
Buka BUKA IJ Ari Jahja Outperform 300.00 210.00 43 1,376 0.5 0.4 0.3 nmf 13.1 3.6 -1.4 0.8 2.7
Sub average 2.4 1.9 1.6 9.6 17.5 13.5 -0.5 2.8 7.3
Japan Ecommerce
ZOZO 3092 JP Yijia Zhai Neutral 3,030.00 2,877.00 5 5,989 4.3 4.0 4.0 13.2 12.5 12.2 60.1 48.1 40.1
For the exclusive use of Saidatul Hassan (saidatulfaeeqah@pnb.com.my) at Permodalan Nasional Berhad

Mercari 4385 JP Yijia Zhai Outperform 4,100.00 3,078.00 33 3,349 2.4 2.3 2.1 22.6 17.8 15.0 28.3 20.6 25.5
Sub average 3.3 3.1 3.1 17.9 15.2 13.6 44.2 34.3 32.8
Korea Ecommerce
Coupang CPNG US Danny Lee Outperform 22.00 17.83 23 31,804 1.3 1.1 1.0 29.4 19.4 14.4 18.1 22.9 24.2
Naver 035420 KS Danny Lee Outperform 260,000.00 186,300.00 40 22,580 3.3 2.9 2.6 15.7 13.9 12.2 4.2 5.5 6.3
Kakao 035720 KS Danny Lee Neutral 57,000.00 41,800.00 36 13,727 2.5 2.1 1.9 18.1 15.2 13.0 3.9 4.7 5.9
Sub average 2.3 2.0 1.8 21.1 16.2 13.2 8.7 11.0 12.1
Average 2.5 2.2 2.0 17.4 15.7 12.6 18.2 16.9 18.7

Source: Bloomberg, Macquarie Research, October 2023

Closing prices as of 18 October 2023.

19 October 2023 19
 Macquarie Equity Research Cross-border e-commerce

Analysts

Ellie Jiang Ari Jahja

852 3922 4110 6221 2598 8366
ellie.jiang@macquarie.com ari.jahja@macquarie.com
Macquarie Capital Limited PT Macquarie Sekuritas Indonesia

Zhiwei Foo Danny Lee

65 6601 0465 822 3705 8690
zhiwei.foo@macquarie.com danny.lee@macquarie.com
Macquarie Capital Securities (Singapore) Pte. Limited Macquarie Securities Korea Limited

Yijia Zhai Jason Zhang

+81 3 3512 5950 852 3922 5723
yijia.zhai@macquarie.com jason.zhang@macquarie.com
Macquarie Capital Securities (Japan) Limited Macquarie Capital Limited

Important Disclosures
Recommendation definitions Volatility index definition Financial definitions
Macquarie – Asia and USA This is calculated from the volatility of historical price All "Adjusted" data items have had the following
Outperform – expected return >10% movements. adjustments made:
Neutral – expected return from -10% to +10% Added back: goodwill amortisation, provision for
Very high – highest risk – Stock should be expected to
Underperform – expected return <-10% catastrophe reserves, IFRS derivatives & hedging, IFRS
move up or down 60–100% in a year – investors should be
impairments & IFRS interest expense
Macquarie – Australia/New Zealand aware this stock is highly speculative.
Excluded: non recurring items, asset revals, property revals,
Outperform – expected return >10%
High – stock should be expected to move up or down at appraisal value uplift, preference dividends & minority
Neutral – expected return from 0% to 10%
least 40–60% in a year – investors should be aware this interests
Underperform – expected return <0%
stock could be speculative.
EPS = adjusted net profit / efpowa*
During periods of share price volatility,
Medium – stock should be expected to move up or down ROA = adjusted ebit / average total assets
recommendations and target prices may
at least 25–40% in a year. ROA Banks/Insurance = adjusted net profit /average
occasionally and temporarily be inconsistent
Low – stock should be expected to move up or down at total assets
with the above definitions.
least 15–25% in a year. ROE = adjusted net profit / average shareholders funds
Recommendations – 12 months Gross cashflow = adjusted net profit + depreciation
* Applicable to select stocks in Asia/Australia/NZ
Note: Quant recommendations may differ *equivalent fully paid ordinary weighted average number of
from Fundamental Analyst recommendations Note: expected return is reflective of a Medium Volatility shares
For the exclusive use of Saidatul Hassan (saidatulfaeeqah@pnb.com.my) at Permodalan Nasional Berhad

stock and should be assumed to adjust proportionately

with volatility risk All Reported numbers for Australian/NZ listed stocks are
modelled under IFRS (International Financial Reporting
Standards).

Recommendation proportions for quarter ending 30 September 2023

AU/NZ Asia USA
Outperform 55.31% 64.52% 63.21% (for global coverage by Macquarie, 2.50% of stocks followed are investment banking clients)

Neutral 36.98% 21.69% 34.91% (for global coverage by Macquarie, 0.64% of stocks followed are investment banking clients)

Underperform 7.72% 13.79% 1.89% (for global coverage by Macquarie, 0.00% of stocks followed are investment banking clients)

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www.macquarie.com/research/disclosures. Clients receiving this report can additionally access previous recommendations (from the year prior to publication of this report)
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The views were reached independently, without any attempt of influence from anyone outside of Macquarie’s Research business. Any and all opinions expressed have a
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19 October 2023 20
 Macquarie Equity Research Cross-border e-commerce

from Macquarie that is based upon various factors including Macquarie Group Ltd.’s overall revenues, a portion of which are generated by Macquarie Group’s Investment
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This publication was disseminated on 19 October 2023 at 01:28 UTC