Sea Ltd SE (former Garena)

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not vested

SEA Ltd (SE US): E-commerce-led profitability in sight [BUY, TP US$100]

Shopee is pursuing profitability, as evident from higher delivery charges and sharp reduction in discount vouchers for small basket purchases

We project Shopee to narrow adj EBITDA losses by 70% (US$1.2bn) in FY23F, we reduce group adj EBITDA losses by 18%/57% in FY22F/23F

Maintain BUY with a lower TP of US$100 based on normalised 20% EBITDA margins in five years

Source: DBS

[winston]

not vested

Sea Limited (NYSE:SE)
Number of Hedge Fund Holders as of Q2, 2022: 65

Sea Limited (NYSE:SE) engages in digital entertainment, e-commerce, and digital financial service businesses.

At the end of the second quarter of 2022, 65 hedge funds in the database of Insider Monkey held stakes worth $2.7 billion in Sea Limited (NYSE:SE), compared to 77 in the previous quarter worth $5.1 billion.

Even when applying cautious multiple assumptions, the stock is undervalued. On August 18, Barclays analyst Jiong Shao lowered his price target for Sea Limited (NYSE:SE) from $125 to $114 while maintaining an Overweight rating for the stock.

In its Q1 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks, and Sea Limited (NYSE:SE) was one of them. Here is what the fund said:

“Sea Limited (NYSE:SE), a global digital gaming and e-commerce company, detracted from performance for the period held. Similar to other online consumer businesses, Sea faced significant multiple compression in the quarter, exacerbated by a slowdown in user growth at its key Free Fire digital game and mounting investments in its e-commerce operation, particularly in new markets like Brazil.

We exited our position as we lost confidence in the long- term unit economics in some of Sea’s new markets and were concerned by the simultaneous slowdown in revenue growth and increase in underlying cash burn.”

Source: Yahoo Finance

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not vested

Sea Limited: The e-commerce leader in Southeast Asia

The company grew total revenue 29% to $2.9 billion, but its non-GAAP (adjusted) loss widened to $1.03 per diluted share as Shopee and SeaMoney continued to operate at a loss.

However, SeaMoney is expected to achieve positive cash flow in 2023, and CEO Forrest Li thinks Shopee and SeaMoney will generate enough cash by 2025 to fund their own growth.

Shopee currently operates in eight of the 10-fastest-growing e-commerce markets in the world. Moreover, online sales across all relevant geographies will total $446 billion by 2025, according to Statista.

Naturally, growth in online shopping should also be a tailwind for SeaMoney. In fact, Bain & Company estimates that digital payment volume in Southeast Asia will approach $1.2 trillion by 2025.

To put those figures in perspective, Shopee facilitated $62.6 billion in online sales last year, while SeaMoney handled just $17.2 billion in total payment volume.

That bullish outlook notwithstanding, investors should not bank on triple-digit gains in the near term. But with shares trading at 2.4 times sales — virtually the cheapest valuation since Sea went public in 2017 — patient investors could still see tremendous returns in the next decade.

Source: Daily Trade Alert

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Another Cathie Wood fund exits Sea after US$175 bil selloff

Source: Bloomberg

https://www.theedgesingapore.com/news/t ... il-selloff

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Aletheia Capital initiates 'sell' call on Sea Limited with TP of US$40

by Felicia Tan

“The cash burn is likely to worsen with its foray into payments and it could be eclipsed by its e-commerce competitors.”

Several downsides to the counter, which includes Sea’s “bloated” e-commerce segment, pointing out that the segment is unlikely to see a positive ebitda till the FY2025.

Misallocated resources by excessively expanding its e-commerce business in Asean and entering Latin America (LATAM). Operating expenses has tripled between FY2020 and FY2022.

Expects Sea’s market share in Indonesia to plateau at 40% to 50%. Its take-rate is also estimated at around 9% in FY2022 to FY2024.

Garena is contracting due to its excessive concentration on Free Fire,
responsible for over 25% of Sea’s gaming revenue.

In the 2QFY2022, Sea’s quarterly paying users in the digital segment were down 39% y-o-y.

On Nov 30, where the lock-up period for investors in GoTo ends, Alibaba and Softbank’s Vision Fund may sell their stake in the group. A sell-off in GoTo could encourage investors to sell Sea Limited, as the comparative valuation multiples for Asean tech could weaken.

Source: The Edge

https://www.theedgesingapore.com/capita ... =ONPAGESEO

[winston]

not vested

SEA Ltd
Riot Games to take back LoL publishing

Riot Games will take back LoL publishing rights from Garena effective Jan 2023. We estimate an EBITDA impact of US$36m (2.8% of Garena’s FY23F).

Share price could remain weak near-term as investors further price in concerns over SE’s relationship with Tencent given developments YTD.

Maintain Hold and TP of US$61.

Source: CIMB

https://rfs.cgs-cimb.com/api/download?f ... 72D78EF07D

[winston]

not vested

Fall of the world’s hottest stock cost Sea founders US$32 billion

by Yoojung Lee

Analysts estimate Sea’s adjusted loss before interest, taxes, depreciation and amortization will widen to US$453.6 million in the third quarter, data compiled by Bloomberg show.

Revenue is projected to grow to US$3 billion from US$2.7 billion a year earlier.

Source: Bloomberg

https://www.theedgemarkets.com/article/ ... 32-billion

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BRIEF - Sea Ltd Has Laid Off More Than 7,000 Employees, Or Around 10% Of Its Workforce

BRIEF-Sea Ltd Has Laid Off More Than 7,000 Employees, Or Around 10% Of Its Workforce, Over The Past Six Months - The Information

Source: Reuters

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Up 36% last night. Not vested

Sea reports net loss of US$569.3 mil for 3QFY2022, down 0.3% y-o-y

by Felicia Tan

In the 3QFY2022, Sea reported a total GAAP revenue of US$3.2 billion, up 17.4% y-o-y.

Basic and diluted loss per share for the 3QFY2022 stood at 0.66 US cents.

As at Sept 30, cash and cash equivalents stood at US$6.25 billion.

Source: The Edge

https://www.theedgesingapore.com/capita ... n-03-y-o-y

[winston]

not vested

<Alert> Sea Ltd - EBITDA losses narrower than street expectations on improved profitability

Group adjusted EBITDA losses excluding one-offs was US$280m, (narrowing by 45% q-o-q), far better than consensus estimate of US$451m loss.

Digital entertainment exhibits signs of weaknesses; likely to be further dented due to macro factors

SE is likely to beat ours and consensus’ FY22F/23F adj EBITDA estimates.

Maintain BUY with an unchanged TP of US$100 using a conservative 12x FY27F EV/EBITDA discounted back by 12% each year.

Source: DBS

https://www.dbs.com/insightsdirect/comp ... ecid=11780