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Sea Limited Is A Good Asia Play In The Time Of COVID-19

Jun. 03, 2020 4:34 PM ETSea Limited (SE)21 Comments
Nick Cox profile picture
Nick Cox


  • SE is in the right arena of online commercial activity in a time of lockdown.
  • The strong backing of Tencent cuts investor risk of investing in SE but allows an investor to avoid exposure to high-risk China.
  • Recent results were well received by the market.
  • Long-term debt seems manageable for a company investing in long-term growth.

Sea Limited (NYSE:SE) hits the right buttons short term in this time of COVID-19. Its main product areas are online gaming and online shopping with future growth earmarked for digital financial services.

In the long term as well, these are organic product growth areas. Being mainly focused on Southeast Asia, it is operating in a macroeconomic growth area.

The recent results were well received by the market even though net profitability looks to be some way off.

The backing of Tencent (OTCPK:TCEHY) is key, in my opinion. SE is a rapidly growing high debt company, but it has the financial and product backing of the world's largest gaming company. My article in March detailed what the company does and how it benefits from the tie-up with Tencent. Investors have an Asian opportunity backed by Chinese money but without the higher risk profile of a China play as the U.S. election looms.

Stock Price

The one-year stock chart shows how profitable SE has been to investors:

Source: Charles Schwab

The year-to-date stock chart shows how the company has not been derailed by the pandemic:

Source: Charles Schwab

Of course, a prospective investor may always wonder if they have missed the boat after such a strong stock rise. Its market cap in 2016 was US$3.8 billion. Now, it is US$36.8 billion. Additionally, it should be noted that some of the rise in the stock price may have been caused by a short squeeze.

For me, there is a lot of future upside over a period of years making the stock still a long-term investment. One way to play the stock for a cautious investor might be to wait for any generalised COVID-19 induced sell-off in stock markets in which SE would be collateral damage and buy then.

The main analysts covering the

This article was written by

Nick Cox profile picture
Nick Cox is a long-time entrepreneur and investor,currently living in Singapore.He has lived and worked in the Asia-Pacifci region for many years.He is a graduate in modern history and economics from University College,London University. His investment strategy is centred around finding long-term growth companies in the region based on inspiring Management and businesses at the cutting edge of new growth areas. Asia is the leading driver of worldwide economic growth today and for the medium term.

Analyst’s Disclosure: I am/we are long SE, TCEHY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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