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Sea Ltd ADR SE

Morningstar Rating
$65.98 −1.02 (1.52%)
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Company Report

Profitability for Sea Improving, Coupled With Robust Growth, but Long-Term Competitive Risks Linger

We expect the Shopee e-commerce platform to be Sea’s main growth driver for the long term; the company’s valuation will be predicated on this business. We estimate Shopee has 30% share of its main market, Indonesia, and we estimate about 30%-35% share in the rest of Southeast Asia. It has built leading market share quickly using subsidies, free shipping, and incentives that attracted consumers to its platform, but in the process it incurred heavy cash burn and has not yet seen positive EBITDA. While positive macro signs exist and Shopee enjoys a market-leading position currently, we believe that it is too early to tell who the ultimate long-term winners will be. E-commerce is still in the early stages in Southeast Asia, and outside of a slight lead in market share, we do not see obvious distinct advantages for Shopee. As user growth has been highly contingent on subsidies that heavily increased sales and marketing expenses, we are concerned that growth could decelerate sharply once these incentives stop and when Sea becomes more focused on profitability.

Price vs Fair Value

SE is trading at a 848% premium.
Price
$66.98
Fair Value
$13.00
Uncertainty
Very High
1-Star Price
$343.00
5-Star Price
$14.00
Economic Moat
Pcj
Capital Allocation
Skkljftr

Bulls Say, Bears Say

Bulls

Sea could maintain its leading market share as Southeast Asia e-commerce expands without having to sacrifice profitability through increased sales and marketing spending.

Bears

Sea might be challenged to achieve profitability due to low switching costs and lack of differentiation on its platform.

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News

Trading Information

Previous Close Price
$67.00
Day Range
$65.5666.54
52-Week Range
$34.3676.60
Bid/Ask
$65.96 / $65.99
Market Cap
$37.87 Bil
Volume/Avg
470,653 / 5.3 Mil

Key Statistics

Price/Earnings (Normalized)
1,698.02
Price/Sales
2.86
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield

Company Profile

Sea operates Southeast Asia's largest e-commerce company, Shopee, in terms of gross merchandise value and number of transactions. Sea started as a gaming business, Garena, but in 2015 expanded into e-commerce, which is now the main growth driver. Shopee is a hybrid C2C and B2C marketplace platform operating in eight core markets. Indonesia accounts for 35% of GMV, with the rest split mainly among Taiwan, Vietnam, Thailand, Malaysia, and the Philippines. For Garena, Free Fire was the most downloaded game in January 2022 and accounted for 74% of gaming revenue in 2021. Sea’s third business, SeaMoney, provides mostly credit lending.
Sector
Consumer Cyclical
Industry
Internet Retail
Stock Style Box
Total Number of Employees
62,700

Competitors

Valuation

Metric
SE
GRAB
JD
Price/Earnings (Normalized)
1,698.02133.918.13
Price/Book Value
5.772.131.28
Price/Sales
2.865.320.27
Price/Cash Flow
20.261,470.204.24
Price/Earnings
SE
GRAB
JD

Financial Strength

Metric
SE
GRAB
JD
Quick Ratio
1.023.030.78
Current Ratio
1.463.261.15
Interest Coverage
−3.928.17
Quick Ratio
SE
GRAB
JD

Profitability

Metric
SE
GRAB
JD
Return on Assets (Normalized)
−0.07%1.03%6.08%
Return on Equity (Normalized)
−0.21%1.39%16.33%
Return on Invested Capital (Normalized)
−0.12%0.01%8.28%
Return on Assets
SE
GRAB
JD
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