Sea Ltd. is a technology giant operating in Southeast Asia. The company has three subsidiaries that focus on different aspects of its business: Garena (video games), Shopee (e-commerce), and SeaMoney (fintech).
A few weeks ago, several ASEAN states, such as Australia, China, and Singapore, signed the Regional Comprehensive Economic Partnership (RCEP) agreement. The agreement supports free trade and facilitates cross-border business for international companies. The agreement has even been called the world’s largest trade agreement, as it includes 30% of the world’s GDP. RCEP advances Sea’s goals of being a Southeast Asian technology company. Now that Sea Ltd. has also reached a $100 billion market capitalization, I think it’s high time to start a thread on the forum!
Simplified breakdown:
Garena
-Publishes Tencent’s games in Southeast Asia.
-Garena also makes games. Garena Free Fire is popular in Asia and South America. The game was the third most-watched game on YouTube in 2020.
-Garena’s subsidiary Phoenix Labs is the company’s AAA game developer. The company was founded by former Riot Games (League of Legends) employees. The company has recently started a multi-project model and is the creator of the game Dauntless.
-Garena is the company’s only profitable subsidiary. Q3: “Adjusted EBITDA was US$584.5 million, up 119.8% year-on-year.”. Garena’s profits are mainly invested in Shopee’s operations.
Shopee
-E-commerce giant in Southeast Asia and Taiwan. E-commerce trends in Southeast Asia are very promising:
-The Shopee Live service can be compared to Alibaba’s Taobao Live. For example, a few weeks ago, Adidas held a 30-minute workout session on the service, where customers could win prizes and buy Shopee-exclusive Adidas products.
-Shopee has grown strongly and become the leading e-commerce platform in the region. According to App Annie, among Southeast Asian e-commerce platforms, Shopee has the most downloads, the most monthly active users, and the highest total time spent in the app.
Market share trends
-It should be noted that profitability is not yet central to Shopee’s aggressive “expansion” strategy. Currently, Shopee is burning a lot of cash. However, the company’s management recently mentioned that Shopee might soon be profitable. Shopee is a key part of the company’s future vision.
SeaMoney
-The company’s Fintech arm, which just received a Digital Banking license in Singapore (to be implemented in 2022).
-The company is also highly likely to be included in next year’s Digital Banking concessions in Malaysia and the Philippines.
-The synergistic effects of the Fintech arm are promising between Shopee and the Shopee Pay e-wallet. This also supports the adoption of digital banking.
Tencent is also a shareholder in the company. In addition, management owns over 20% of the company, and the shares of the company’s CEO, Forrest Li, give him controlling power. This can be compared, for example, to Google’s A, B, and C shares and the controlling power of Sergey Brin and Larry Page. In my opinion, the management is among the best in the world, and most of them have been involved in the company’s operations since its early days.
Here’s a good article about the company’s and management’s history: Forrest Li’s Sea Ltd Surges As Pandemic Drives Digitalization Across ASEAN
Sea Limited is in an interesting market position because, unlike many other developing markets, Southeast Asia is largely politically and economically stable. However, the stock has risen rapidly, and many expectations have been placed on it. I myself joined in the summer. Are there any other sledders on the forum?
