Sea Ltd SE (former Garena)

[winston]

not vested

Margin recovery in sight

SE is increasingly embedding AI across its ecosystem; we see this as a structural driver of efficiency gains and long-term monetisation uplift.

Our positive FY26F expectations:
a) e-commerce margins improve as reinvestment bears fruit;
b) financial services grow with loan book expansion.

Reiterate Add, with an unchanged TP of US$195.

Attractive entry point with upside skew after 42% share price correction since Sep 25 peak, in our view.

Source: CGS

https://rfs.cgsi.com/api/download?file= ... FAE6F2BA88

[winston]

not vested

Balancing growth and margins to deepen its moat

We expect 4Q25F group adj. EBITDA to be in line with consensus estimate of USD843mn, affected by normalisation of Gaming adj EBITDA to USD355mn (-24% q/q) and supported by e-commerce at USD208mn (+12% q/q) and Fintech at USD298mn (+15% q/q).

We project FY26F adj group EBITDA of USD4175mn in FY26F implying 20% growth (vs 27% earlier).

Our revised projections are 6% below consensus due to flat e-commerce margins in FY26F (vs higher margins earlier) as Shopee focuses on scale and investments in an otherwise improving competitive environment.

BUY with a revised TP of USD175 (prev USD205) as we lower the e-commerce multiple to 2.5x EV to 12m sales (vs 3.5x earlier).

Currently, its e-commerce business is trading at 12m forward EV to sales of just 1.0 x at a ~60% discount to e-commerce peers.

Source: DBS

https://www.dbs.com/insightsdirect/comp ... ecid=29583