New Indonesian Law Should Protect Sea and GoTo in Long Run, but Short-Term Challenges Remain

With reference to the July 27 Indonesian government regulation to ban imported goods under USD 100 on e-commerce platforms, our view remains and our fair value estimates for Sea and GoTo are unchanged at USD 70 and IDR 75, respectively. We reiterate our previous stance that both platforms will still likely have challenges on achieving both gross transactional value growth and profitability at the same time. While the new law is an incremental positive in the long term for both companies, there is no effect on their near-term headwinds which relate to how consumer demand is declining as a response to increasing commission fees and subsidy cuts on the platforms.