Broker: Maybank Research Pte Ltd
Date of Report: 15 September 2025

ASEAN Internet and Telco Stocks: Sea Ltd, Singtel, and Regional Winners Ride the AI and Cloud Wave

Executive Summary

The Southeast Asian internet and telecom sectors are experiencing robust growth, propelled by AI-driven demand, neocloud expansion, and strategic consolidation. This comprehensive analysis dives deep into the latest sector trends, company highlights, and actionable insights for investors, with a spotlight on Sea Ltd, Singtel, Indosat, and more. The report also covers the Malaysian market outlook, new developments in wind energy, and the implications of Starlink’s direct-to-cell (D2C) satellite technology.

Sea Ltd: From Scale to Monetization – All Engines Firing

Sea Ltd continues its impressive transformation from rapid user growth to aggressive monetization, especially through its Shopee and Garena divisions. The company’s latest move—raising Shopee’s seller commissions for the second time within 12 months—has been well absorbed by the market, directly increasing Adj. EBITDA/GMV by 0.1–0.2 percentage points. Further upside is anticipated from Shopee’s expansion into offline-to-online channels and fintech innovations, particularly buy-now-pay-later (BNPL) services.
On the gaming front, Garena is sustaining its flagship title, Free Fire, through high-profile collaborations and is ramping up new titles such as Delta Force and Free City. The adoption of AI-driven development within Garena is also set to enhance margins by accelerating content iteration and operational efficiency.
Maybank Research has raised Sea Ltd’s FY25–27 EBITDA forecasts by 10–25% and upgraded the target price by 16% to USD238. At current valuations—2.9x EV/sales and 24.1x EV/EBITDA—Sea Ltd trades at a 13–35% growth-adjusted discount to global e-commerce peers, reinforcing its BUY rating.

• Shopee: Seller commission hikes absorbed, further monetization expected from fintech and O2O expansion
• Garena: AI-powered game development, new title launches
• Financials: FY25–27 EBITDA up 10–25%, TP to USD238 (+16%)
• Valuation: 2.9x EV/sales, 24.1x EV/EBITDA – growth-adjusted discount

ASEAN Telcos: Neocloud and Starlink’s D2C Satellite Revolution

Neocloud Capacity: A Game Changer for ASEAN Telcos

The AI boom is fueling unprecedented demand for neocloud providers—specialized firms offering GPU compute power optimized for AI workloads. Global giants like Microsoft and Oracle have locked in massive GPU capacity, while regional telcos are quickly positioning themselves as early beneficiaries.

• Revenue Opportunity: Telcos expected to generate USD21bn in GPU-as-a-Service (GPUaaS) revenue by 2030.
• Key Beneficiaries: Singtel and Indosat are set to lead, with Singtel scaling up its RE:AI sovereign cloud platform and Indosat targeting a ~3% EBITDA uplift from AI cloud by 2026.

Starlink Direct-to-Cell (D2C): Expanding Rural Connectivity

SpaceX’s acquisition of spectrum (USD17bn) enables Starlink’s D2C service, connecting standard 4G/5G smartphones via satellites—no extra hardware needed. While not a replacement for terrestrial networks, D2C will dramatically enhance coverage in underserved rural markets across Indonesia, the Philippines, and Australia.

• Strategic Impact: Smaller operators can partner with Starlink to close network gaps; Optus (Australia) can bridge the rural gap with Telstra, benefiting parent Singtel.
• Indonesia & Philippines: Rural coverage to expand beyond current ~97% 4G levels, especially in island regions.

Malaysia Market Outlook: Small Caps Shine, Large Caps Steady

Following a strong 2Q results season, sentiment in the Malaysian market is turning positive, especially in the small-cap segment. Most large caps—banks, consumer, plantations, and REITs—met expectations. The KLCI index target remains at 1,660, with minor tweaks to earnings growth projections (1.5%/8.2% for 2025E/26E).
Maybank’s Quant Team has observed outperformance of momentum-style factors over low-volatility strategies. Top picks have been updated, with additions such as HLB, IHH, ECOSHOP, SDG, WPRTS, MNH, SOLAR, and NE. Removals include PBK, AMMB, AEON, ITMAX, ATECH, and YTLP. TNB, FFB, GAM, KPJ, FRCB, and PREIT remain top selections.

Malaysia KLCI Earnings Forecast

Key Company and Sector Highlights

Singtel: Multiple Growth Engines, Outperformance Expected

Singtel has outperformed peers, with further growth anticipated:

• Optus (Australia): Benefiting from rational competition, price hikes, and ongoing rightsizing initiatives. Margins are 4–5ppt below peers (TLS/TPG), with more upside expected as the capex cycle peaks and network-sharing (MOCN) with TPG delivers capex optimization.
• Singapore Telco Consolidation: Market rationality is boosting ARPU recovery prospects; global precedents point to a ~5% industry revenue rebound post-merger.
• Nxera Data Centers: Scaling fast in ASEAN—over 50% of its 58MW Tuas site (live Jan-26) and 80% of its first Thailand facility pre-sold. Johor and Batam contribute to a 400MW regional pipeline.
• Regional Associates: Improvement in Indonesia and Philippines, strengthening the group’s overall position.
• Valuation: Target price raised 11% to SGD4.75. Reiterate BUY.

StarHub: Upgraded to BUY as Singapore Telco Sector Consolidates

• Outlook: Sector upgraded to POSITIVE as consolidation drives rational pricing and revenue growth rebounds (4–5% pa in 2026–27 from -3% to -5% declines).
• ARPU: Singapore ARPUs sit 15–40% below developed market Asia peers.
• Recommendation: StarHub upgraded to BUY (TP SGD1.35, +6% yield, -1σ valuation).

Indosat: Early Beneficiary of AI Cloud Growth

• AI Cloud: Targeting a 3% EBITDA uplift from AI cloud by 2026—an important new growth driver.

CapitaLand Commercial C-Reit: Strong Shanghai IPO Demand

• IPO: Public offer 535 times subscribed, raising 2.29 billion yuan.
• Significance: China’s first international-sponsored retail C-Reit and CLI’s eighth listed fund; complements Singapore-listed CLCT for international investors.
• Strategy: Part of CLI’s capital recycling plan to strengthen the balance sheet and redeploy capital across China.

First Active Bond ETF on SGX

• Product: Lion Global Investors wraps the LionGlobal Short Duration Bond Fund into an ETF, offering a low-cost, diversified fixed income investment (management fee: 0.25%, max 1%).

DBS: Dividend Leader Among Singapore Banks

• Performance: Shares hit a record S\$53.24, supported by robust dividend flows and high liquidity.
• Outlook: With policy rates expected to decline, net interest margin compression could cap future dividend growth.

Malaysia Banks: Stable Earnings, Attractive Dividends

• 2Q25 Results: Cumulative net profit growth forecast at 2.1%/4.9% for 2025/26E, with aggregate ROAEs of 10.1%. Dividend yields exceed 5%.
• Sector View: NEUTRAL, with top BUYs on HLBK, AMMB, PBK.

Thailand REITs: Poised for US Fed Rate Cut Upside

• Positive Outlook: Anticipated US Fed rate cuts could lower yields, raising Thai REITs’ unit prices.
• Top Picks: DIF (TP THB9.5), CPNREIT (BUY); downgrade 3BBIF to HOLD (only 6% total return potential).
• Key Metrics: DIF offers a healthy IRR of 6.6% (vs 3BBIF’s 4.9%), FY25–26E yield of 10%, and relatively low risk due to TRUE’s lease commitment.

Japfa Comfeed Indonesia: Positioned for Poultry Demand Growth

• Recommendation: Maintain BUY, TP IDR2,300 (7x PE, 0.5SD below 3-year mean).
• Strengths: Operational efficiency via technology adoption, growing consumer goods presence reducing earnings cyclicality.

Sustainability Spotlight: Suzlon Energy and Wind Power Growth

Maybank recently toured Suzlon Energy’s nacelle assembly plant, highlighting the company’s leading position in the Indian wind energy sector.

• Capacity: Wind turbine production now at 4.5GW per annum; India expected to add 6.0GW in FY26E (vs 4.15GW in FY25).
• Financials: Revenue guided to grow 60% YoY in FY26E; exports to resume from FY27.
• Regulatory: New domestic content rules to level the playing field against Chinese suppliers.
• O&M EBITDA: Increasing, bolstering the balance sheet.

ASEAN Export Outlook: Tariff and Inventory Risks Overstated

Despite concerns over reciprocal tariffs and potential export slowdowns, three mitigating factors are noted:

• US inventory buildup has not been material.
• ASEAN retains a “relative” tariff advantage versus competitors.
• Electronics—comprising a large share of ASEAN exports—remain largely exempt from new tariffs.

Conclusion: Transformation and Opportunity Across ASEAN Markets

ASEAN’s internet and telco sectors are at an inflection point, driven by new monetization strategies, AI and cloud adoption, sector consolidation, and sustainability initiatives. Sea Ltd stands out as a top e-commerce and gaming play, Singtel and Indosat are well-positioned for the AI cloud wave, and small-cap stocks in Malaysia are set to outperform. Meanwhile, new developments in wind energy and REITs offer further avenues for diversified investment.
Investors should remain alert to consolidation-led recovery, AI/cloud monetization, and regulatory shifts as key drivers of future returns across the region.

Definitions and Disclosures

• BUY: Return expected above 10% in the next 12 months (including dividends)
• HOLD: Return expected between 0% to 10% in the next 12 months
• SELL: Return expected below 0% in the next 12 months